Top 5 Reasons You Need a Stand-Alone Product Recall Policy: Understanding Policy Limitations

May 30, 2024

In today’s consumer-driven market, the risk of a product recall can pose a significant threat to businesses. While many companies rely on their general liability (GL) policies, these often fall short when providing comprehensive coverage for product recall events. 

The problem? Your clients are left with critical gaps that expose their businesses to substantial financial losses and reputational damage. No agent wants to be responsible for that!

A stand-alone product recall policy offers specialized coverage tailored to the unique risks associated with product recalls. At Jencap, we understand this market’s complexities and GL policy limitations – and we often recommend having both to bridge any gaps or sub-limited coverages. Let’s look at why you need a team of experts who specialize in navigating the intricacies of product recall coverage so you can offer your clients the most comprehensive protection available.

1. Financial Protection

A product recall can quickly become expensive, with costs piling up for notification, product testing, transportation, lost profits, and more. GL policies may have low sub-limits or exclusions for these expenses, leaving businesses to bear the full financial burden. A dedicated product recall policy provides full aggregate limits, ensuring businesses aren’t left underinsured when the unthinkable occurs (and you aren’t left bearing the brunt of your client’s frustrations).

2. Reputation Management

In our digital age of cancel culture, a product recall can rapidly spiral into a public relations crisis that causes significant reputational damage. Product recall policies cover crisis management and public relations expenses, helping to mitigate this negative impact. This includes costs for hiring product recall firms, issuing statements, and implementing strategies to rebuild consumer trust and confidence.

3. Regulatory Compliance

Product recalls are often subject to strict regulatory requirements from agencies like the Federal Drug Administration (FDA) and the U.S. Consumer Product Safety Commission (CPSC). Failure to comply can result in hefty fines and penalties. A stand-alone product recall policy can better navigate these complex regulations, ensuring they meet all necessary obligations. From expenses related to regulatory reporting, product testing, and compliance audits to reducing the risk of non-compliance and associated penalties, a product recall policy covers your client (and your reputation). 

4. Enhanced Coverage

While GL policies may offer endorsements related to product liability or advertising injury, these endorsements often have limitations and exclusions that leave gaps in coverage. On the other hand, a stand-alone product recall policy offers specialized coverages tailored to the unique risks associated with product recalls. This can include extraneous matter endorsements, which cover the accidental contamination of products, as well as adverse publicity protection, which helps mitigate the negative impact of a recall to a brand’s reputation.

5. Peace of Mind

Perhaps most importantly, investing in a stand-alone product recall policy provides businesses with peace of mind. They can know that they have dedicated coverage specifically designed to address the risks associated with product recalls. When you bring this specialized coverage to your client, they can prepare for the unexpected while also focusing on their core operations without the constant worry of a recall event crippling their financial stability or reputation.

How Jencap Can Help

Don’t leave your clients’ businesses vulnerable to the devastating consequences of product recalls. Our team of dedicated product recall brokers will craft tailor-made insurance solutions for your clients unique needs and safeguard their hard earned reputation and financial stability. Contact Jencap today to get a quote.

The Jencap Professional Lines Insurance Team

The Jencap Professional Lines Insurance Team

Whether it’s professional, management, or cyber liability, Jencap’s experienced brokers stay on top of industry trends and one step ahead of the competition, so they can offer the best guidance to you and your clients. Armed with decades of experience, Jencap’s dedicated professional lines team works tirelessly to navigate difficult risk placements, strict security control requirements, ever-changing market capacity, and unpredictable rate fluctuations.
Aggregate limits | Claims management | Policy limitations | product safety | Risk assessment



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