DEFINITION of 'Product Recall Insurance'

Insurance that covers expenses associated with recalling a product from the market. Product recall insurance is typically purchased by manufacturers such as food and beverage, toy and electronics companies to cover costs such as customer notification, shipping costs and disposal costs. Coverage generally applies to the firm itself, though additional coverage can be purchased to cover the costs of third parties.

BREAKING DOWN 'Product Recall Insurance'

Product recalls can be involuntary (required by a regulatory agency or the government) or voluntary (the manufacturer notices a defect that is unlikely to force an involuntary recall), and can be costly. Some product types are generally not covered under product recall insurance, such as automobiles and related products, explosives and tobacco.

RELATED TERMS
  1. Cover Note

    A temporary document issued by an insurance company that provides ...
  2. Extra Expense Insurance

    Insurance coverage that provides funds for reasonable and necessary ...
  3. Personal Lines Insurance

    Property and casualty insurance products for individuals that ...
  4. Production Cost

    A cost incurred by a business when manufacturing a good or producing ...
  5. Open Cover

    A type of marine insurance policy in which the insurer agrees ...
  6. Assigned Risk

    A risk that an insurance company is required to provide coverage ...
Related Articles
  1. Investing

    How Do Recalls Affect A Company?

    A product recall is the process of retrieving and replacing defective goods for consumers. When a company issues a recall, the company or manufacturer absorbs the cost of replacing and fixing ...
  2. Insights

    A Year In Product Recalls

    Some products were announced with great hype, only to be pulled from shelves.
  3. Insights

    Finessing A Recall

    Consumers can be forgiven for wondering if all the recalls are out of honest safety concerns or simply smart business.
  4. Investing

    The 5 Largest Food Recalls In History

    Food recalls are common, but some food manufacturers are so large that a recall can impact the entire industry.
  5. Investing

    Polaris Industries Is Recalling Indian Motorcycles

    Polaris Industries (NYSE: PII) has another big problem on its hands. Once again, the powersports vehicle manufacturer has been forced to announce a recall, but this time it's for a fire hazard ...
  6. Insights

    Tesla Recalls 7,000 Charging Adapters (TSLA)

    Tesla's voluntarily recall involves adapters for electric vehicle charger believed to have overheated, resulting in melted plastic on the adapters.
  7. Personal Finance

    Even Worse News About Airbag Recalls: What to Do

    The recall numbers are even higher than previously estimated. How to look up your car – and what to do if you find it on the recall list.
  8. Investing

    Really, Polaris Industries? Another ATV Recall?

    Seriously, Polaris Industries (NYSE: PII), this isn't even funny anymore. The powersports vehicle manufacturer just announced it was recalling yet another of its models -- the Sportsman 570 ...
  9. Investing

    GM Gains Time to Prove Airbag Recall Not Necessary (GM)

    Critics fear U.S. auto safety regulators' grace period for faulty airbag recall may set a precedent.
  10. Investing

    McDonald's Recalls 29 Million Fitness Trackers (MCD)

    McDonald recalls 29 million fitness trackers that were included in U.S. and Canadian Happy Meals.
RELATED FAQS
  1. What are the different types of costs in cost accounting?

    Learn about the different types of costs associated with cost accounting, such as direct, indirect, fixed, variable and operating ... Read Answer >>
  2. How is the marginal cost of production used to find an optimum production level?

    Understand more about production cost calculations, and specifically how the marginal cost of production is used to determine ... Read Answer >>
  3. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  4. What are some examples of industries that practice price discrimination?

    Understand the various types of insurance coverage offered in the insurance marketplace, and learn why each policy should ... Read Answer >>
  5. Can companies insure their accounts receivable?

    Understand what credit insurance is and how it protects companies against payment problems they may encounter in trying to ... Read Answer >>
  6. What are some examples of when insurance bundling is a bad idea?

    Learn about situations where insurance bundling may not be a favorable option. Bundling insurance is often a good idea, but ... Read Answer >>
Hot Definitions
  1. Leverage

    1. The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. ...
  2. Trumponomics

    Trumponomics is a term for the economic policies of President Donald Trump.
  3. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits to all persons in a specified region. Many countries, such ...
  4. Davos World Economic Forum

    The annual meeting of the World Economic Forum hosted at Davos—a small ski town in Switzerland—in January each year is among ...
  5. Smart Home

    A convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world ...
  6. Efficient Frontier

    A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a ...
Trading Center