Product recall insurance covers expenses associated with recalling a product from the market.
Product recall insurance is typically purchased by manufacturers such as food, beverage, toy, and electronics companies. Many costs come with a product recall, including shipping costs, warehouse costs, disposal costs, and restocking costs. Product recall insurance covers these expenses.
Coverage generally applies to the firm itself, though additional coverage can be purchased to cover the costs of third parties.
Product recall insurance is triggered when a product poses severe health risks and/or death to users of the product.
Product recall insurance is intended to protect companies from financial loss and bankruptcy resulting from product recalls.

Product recall insurance cover:

• Costs associated with informing the distribution network and the public;
• Cost of return, sorting and physical liquidation of the product;
• Cost of repair or replacement of defective products;
• additional personnel and overtime costs.