Larry D. Mason, a partner in Goldberg Segalla’s Global Insurance Services group, spoke with Law360 regarding product-recall coverage, what policyholders should keep in mind, and how insurers typically structure product-recall policies.
“The insurance market has responded with the opportunity for businesses with product-recall risks to purchase product-recall coverage from a variety of insurers. Like the CGL [commercial general liability] insurance market, product-recall policies vary from insurer to insurer,” Larry explained, noting the misunderstanding that CGL policies cover recalls, while the policies are distinct in what they cover.
Larry also defined the two typical types of product-recall policies that insurers may provide. One covers expenses an insured may have in the case of a recall, and the other covers liability for damages that a third party might suffer due to a product that has been recalled.
“Covered incidents [are] typically defined to include the recall, removal, withdrawal, disposal of, recovery or possession or control, or purposeful destruction of the insured’s product(s) because the use or consumption of the insured’s product(s) has, or will result in, imminent bodily injury or property damage,” he emphasized, as covered incidents under a relevant policy period are a common focus for recall policies.
Larry recommended consulting with one’s insurance broker so that a policyholder will know if their product recall coverage is triggered at a given time. “Each product-recall product is unique and is subject to its terms, conditions, limitations and exclusions,” Larry said.
“Knowledge, Care Are Keys In Product Recall Coverage,” Law360, July 22, 2022