June 29, 2010 by Canadian Underwriter
XL Insurance launched coverage enhancement for adulterated ingredient product recalls.
The product enhancement covers the recall of an insured’s product caused by an ingredient that is subject to a recall notice, even if there is no evidence that the insured’s product itself would cause injury, an XL release says.
For coverage to be triggered, traditional product contamination policies require the insured to prove their own product is contaminated and would cause injury. As a result, a company caught-up in a nationwide recall of products caused by an adulterated (or added) ingredient may find its own products are not deemed ‘contaminated’ under traditional coverage.
The biggest recall in U.S. history occurred in 2009, when hundreds of products were recalled due to the inclusion of contaminated peanuts supplied by Peanut Corporation of America, said Ed Mitchell, global product recall manager for XL Insurance.
“Many companies found they were either uninsured or that their policies didn’t apply when they recalled their product with contaminated ingredients,” he continued.
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