What is Product Recall Expense Coverage?

Written by Joueliz Velez
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Table of Contents

    1. Safeguarding Your Business: The Importance of Product Recall Expense Coverage
    2. Does your Business Need it?
    3. Unica’s Product Recall Expense Coverage Summary
    4. Action Steps

Safeguarding Your Business: The Importance of Product Recall Expense Coverage

Consider this: The insured is an import/export wholesaler who purchases products from around the world and sells these goods in Canada. One of these products includes Christmas decorations that are purchased from a foreign country and have the approved CSA standard sticker. The insured sells these products to a large supermarket chain in Canada where they’re used both as a display and sold to customers. The CSA stickers are later discovered to be fraudulent, and the product poses a potential risk of catching fire. In a bid to minimize losses, a nationwide recall is initiated in Canada, prompting the supermarket chain to instruct the insured to retrieve all inventory of the supplied product from each location, with the insured bearing all associated recall costs.

With increased media and social media visibility, news of a product recall can spread rapidly which can result in costly expenses as well as significant financial impact and reputational damage to a business’s brand.

Product Recall Expense Coverage is a must-have for any company that produces or supplies goods for consumer use and/or consumption. This coverage addresses expenses incurred if a company must recall unsafe products distributed, aiming to protect public safety and preserve the brand. It ensures financial support for actions taken to prevent bodily injury or property damage.


Does your Business Need it?

During manufacturing, products may develop defects or deficiencies that can cause bodily injury, sickness, disease, or death when customers purchase and use them. These issues can also result in physical damage or destruction of property.

As stricter global regulatory standards, evolving product safety rules, and more rigorous quality control guidelines emerge to protect consumers, the risk of product recall is increasing, presenting a significant challenge for companies across various industries.

Detecting these defects or deficiencies early can prevent and significantly reduce losses by recalling the products from the market. However, the associated costs of product recall can still have a substantial financial impact on operations.

Your underlying CGL policy excludes product recall specifically for your product, making it essential to include Unica’s Product Recall Expense Coverage as an additional supplement to your insurance coverage.


Unica’s Product Recall Expense Coverage Summary

This coverage shields the insured by covering expenses for withdrawal, recall, inspection, repair, replacement, adjustment, or disposal of supplied goods. It safeguards against financial losses incurred when the insured must remove or replace potentially harmful products. The Product Recall coverage offers protection up to $100, 000 and covers expenses such as:
  • Communications, including radio and television announcements, printed advertisements, telephone and other communications
  • Cost of shipping the Insured’s goods or products to the place or places designated by the Insured
  • Hiring additional persons
  • Overtime pay for regular employees
  • Reasonable and necessary costs incurred by employees, including transportation or accommodation; or
  • Renting or hiring additional warehouse or storage space


Action Steps

To find out if you should add this coverage to your policy, talk to your broker about your coverage.

If you’re not insured with Unica but want to safeguard your business, connect with a broker to explore Unica’s Wholesalers Connection™.

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About Joueliz Velez

Senior Portfolio Underwriter, Commercial InsuranceJoueliz is passionate about utilizing her expertise to find solutions, develop relationships and deliver exceptional service. She is driven towards continuous improvement and development, inspired by the changing and challenging insurance industry. She started her insurance career in 2005 and has gained experience in both Personal and Commercial Insurance. She has been a part of several projects and teams—positively contributing to the success of the organization. Joueliz obtained her Business Administration Marketing diploma from Sheridan College.
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