Product Recall

Our product recall team has expertise in dealing with claims involving all major product sectors

Product Recall

Our experience includes advising on all major coverage issues such as the definitions of insured event triggers, pre-inception circumstances and other policy exclusions and conditions, causation, “Loss” definitions, and policy validity questions regarding nondisclosure and misrepresentation. In addition, we assist with the adjustment of covered first party loss, particularly in high-value claims. Increasingly, we defend insureds against recall and financial loss claims brought by customers and other downstream parties, and we pursue recovery actions against suppliers and other responsible third parties.

Our product recall team has expertise in dealing with claims involving all major product sectors, including food and beverage, automotive systems and components, toys, pharmaceuticals, cosmetics, and industrial machinery. We have an in-depth understanding of regulatory regimes relating to different product sectors, and advise on domestic and overseas product safety regulations and enforcement where relevant to liability or coverage.

We have experience of assisting on matters involving many foreign jurisdictions, including New York and other US states, Canadian provinces, Australia, New Zealand, France, Germany, Finland, Mexico, Chile, India and others. We are highly experienced in applying US recall coverage case law, including when instructed directly by US insurers. In many cases, we can help negotiate settlements without having to engage local counsel, or we can help engage and monitor the best local counsel where assistance is required.

In addition, we provide a variety of other related services. including advice on supply chain contract terms and risk registers, incident prevention and preparedness, and coverage workshops to stress-test policy wordings in various loss scenarios.

Our Product Recall Experience

Automotive component defects

An international recall of vehicles arose following the detection of parts that were allegedly defective because of inadequate heat treatment by the insured.  The insured’s customer issued French proceedings against the insured as well as its recall insurers (Lloyd’s) and liability insurers. We advised Lloyd’s on coverage under the English law recall policy, and provided an opinion to the French court on English law regarding insurance coverage for recall losses.  We also worked closely with French counsel regarding issues of liability and quantum regarding the recall losses.

Food contamination (Salmonella)

Following the detection of Salmonella in a third party ingredient, the insured made large claims against recall insurers and the ingredient supplier for various losses, including business interruption sustained during investigations and the procurement of a new ingredient supplier.  We advised on English law coverage issues, and a settlement was negotiated for a small proportion of the claimed loss.  We also advised on the related recovery action (involving English law and Mexican law).

Pharmaceutical product adulteration

We advised US insurers on recall coverage issues following the accidental adulteration and degradation of a pharmaceutical product that was consequently withdrawn from the market.  Issues included whether the definitions of Accidental Contamination and Governmental Recall were satisfied.  We negotiated directly with the insured’s US coverage counsel, and achieved a highly favourable settlement.

Food contamination and facility shutdown (Listeria)

We have advised recall insurers on coverage (including liability issues) under an Irish law policy, following the discovery of Listeria in food manufactured at a US facility, and the subsequent suspension of the facility’s registration.  A favourable settlement was negotiated.

Cosmetic products

We advised insurers of a cosmetics product manufacturer on issues of UK and EU regulations, when it was alleged that a recall and withdrawal may be required because of breach of regulation.  We advised that the products actually complied with regulations, and consequently the products could be sold.

Recovery action – food recall losses

We were instructed by recall insurers and their insured to assist with recovering significant losses resulting from a third party supplying an ingredient contaminated by undeclared peanut protein.  We succeeded in recovering the bulk of the loss from the supplier’s insurer.

Pharmaceuticals – suspected tampering

Advising London insurers of a recall policy governed by Indian law, following suspected unauthorised interference with pharmaceuticals.

High-profile recalls

Advising US and London insurers on numerous high-profile product safety and recall issues, including cases involving “horsemeat”, cumin (peanut protein), romaine lettuce (E.coli), chocolate (Salmonella), and vehicle airbags.