First Party Recall

Does your product liability insurance cover the real costs of a product recall?

Product recall situations present real threats to manufacturers; maintaining key business relationships, restoring production and protecting cash flow is absolutely vital. Skillful handling of a recall not only minimises any damage caused by a faulty product, but also demonstrates reliability and professionalism to important wholesale and retail connections – which will be essential when the time comes for speedy redistribution and remarketing of the product. 

Third party and products liability insurance may cover legal liabilities for injury or damage, but they will not usually cover the costs of recalling a faulty product. Considerable costs can be incurred in recalling products and in rebuilding public confidence. The chain of events triggered by a recall, whether voluntary or compulsory, can include a drop in sales, loss of customers’ confidence, loss of hard-won retail shelf space and loss of critical supply contracts. 

AIG South Africa’s Recall Insurance can protect businesses from the devastating effects of such recalls; covering the key expense areas and also providing the expertise of NSF, Edelman or other independent recall consultants to guide the company through the critical first few weeks of a product recall.

Features & Benefits

The policy covers costs to inspect, withdraw, or destroy, the product, incurred within twelve months after the recall, including: 

  • Communication; (radio, TV, Internet, ads…).
  • Shipping from purchaser, distributor or user.
  • Overtime and additional personnel costs.
  • Storage costs and cost of disposal.
  • Redistribution.
  • Independent Security, PR or Recall Consultants (no deductible).

Who is it for?

Non-component finished goods manufacturers in the following sectors: 

Toys and child related products, Sports and recreational equipment, Packaging and containers, Garden and agricultural equipment, Tools and cleaning fluids, Household appliances and equipment, Heating and cooling systems, Furniture, fixtures including construction materials.


What is covered?

The insurance covers loss arising out of the recall of a product as a result of: 

  • Accidental omission, introduction or substitution of a component or substance; 
  • Error in the design, manufacture, packaging, blending, mixing, compounding, labelling or storage; 
  • Intentional, malicious damage by an employee or third party; provided that the use of the insured product has resulted in or would result in bodily injury or property damage.

First Party Recall policies are short-term products and are underwritten by AIG South Africa Limited, FSP No:15805