By Mike Lopemancrib

Thousands of products are recalled annually.  Today, the recalling of a product has become more costly than ever before. These actions place brands and reputations on the line.

Product recalls are necessary when a product has or is suspected to have a defect that will potentially cause bodily injury or property damage. The decision to recall a product can be made by the company or by a government agency. With so many factors that have the potential of affecting a product from manufacturer to retailer, the need for product recall insurance coverage has emerged.

Product recall insurance coverage has been available to some degree since the 1980s but, only within the last decade has it become more widely available.

In 1966 the Insurance Services Office (ISO) introduced an endorsement that excluded product recall from the general liability policy, causing many insurance carriers to introduce non-standard product recall policies.  However, these policies were unpopular due to costly implementation procedures in order to qualify for the coverage. The proposed rules issued by the U.S. Food and Drug Administration cast a new light on product recall insurance.

Just what does a product recall policy cover?  Similar to warehouse legal liability, every policy is unique and each insurance company develops its own policy terms and conditions.

Is this coverage needed? It is possible that a warehouse-based 3PL will be affected by a recall of the materials and products it handles. The list grows every day: Go to to see the list of products being recalled.

Mike Lopeman, Artex Risk Solutions, Inc., presented on the topic of product recalls during the January 2014 IWLA Insurance Company Board Meeting.


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