Falvey Cargo Updates

Product, Defect, Recall, and Contamination Coverage For Consumer Durables

Posted: September 30, 2020 in:

Facing a recall on a finished good? Falvey Insurance Group recently introduced our new Product, Defect, Recall, and Contamination (PDRC) coverage. One element of our comprehensive PDRC policy is specifically focused on consumer durables: This coverage protects final product consumer goods manufacturers from the financial and reputational damages associated with a recall. 

No matter how careful you are, recalls can happen. Sometimes they’re a result of accidental contamination, while other times they occur due to malicious tampering or extortion. But whatever the reason behind a recall, without insurance coverage, the impact can be catastrophic to your business. 

Examples of Major Consumer Durable Recalls

  • Disposable Barbecues: One example of a costly recall occurred when a family’s disposable barbecue exploded. Fortunately, no one was hurt, but the family later found an ammunition shell inside the barbecue. Due to this incident, all barbecues made by this manufacturer were recalled immediately, which coincided with peak barbecue sales season. After investigating the issue, the ammunition shell was eventually traced back to the charcoal supplier. It was determined that the supplier imported charcoal from a country that was undergoing civil unrest and the ammunition shell was likely linked to that area. Because the barbecue manufacturer was able to identify the problem, it could place its barbecues back on the market. However, due to the business interruption and consultant costs needed to investigate the event, the recall wound up costing approximately $4 million—only half of which the insurers covered.
  • Jewelry: A jewelry company was forced to recall a line of costume bracelets that were causing skin irritations. These bangles were packaged with different colored paints and designed to let the wearer customize and paint them to their liking. While the paint supplier tested the paints separately, they did not realize that a skin reaction could occur when the paint colors were combined. Since the paint supplier could not isolate the issue, the jewelry company recalled all the bracelets and re-released them using different, safer paint. Though the jewelry company was insured, the recall cost roughly $2 million, split evenly between the recall costs and business interruption. 

Falvey’s PDRC Protection For Consumer Durables
As the above examples suggest, consumer durable recalls can have a costly impact, from financial hits to ruined reputations. Falvey’s comprehensive PDRC coverage for these products includes:

  • Recall costs
  • Brand rehabilitation expenses
  • Extortion payments
  • Business interruption
  • Third-party recall contractual liabilities
  • Extra expenses 

Read more about our PDRC coverage for food & drink products, pharmaceutical & medical devices, and automotive components.

Learn More

Ready to learn more about PDRC coverage and how it can help protect you and your assets? Contact us. We can help. 


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