We use analytics cookies to understand how the site is used and improve it. No tracking runs until you allow it. See our Privacy Policy.
A recall costs money before anyone is hurt, and your liability policy excludes all of it.
Get a quoteIn short
Product recall insurance pays the costs of getting a defective or contaminated product back from the market, which a commercial general liability policy excludes. First-party cover pays your own recall expenses, such as notification, retrieval, storage, destruction and extra staff. Third-party cover pays your customers' costs of recalling products that contain yours. Many wordings can add lost profit, replacement and brand rehabilitation costs, and crisis consultants.
Last reviewed
Product recall insurance pays the costs of getting a defective, contaminated or mislabelled product back: notifying customers and regulators, retrieving and destroying stock, extra staff, and, in third-party wordings, your customers' own recall costs. Your commercial general liability policy excludes every one of those costs. It pays only the injury and damage claims, through its product liability coverage.
Recall duties in Canada start the moment you learn of a problem. Food businesses under the Safe Food for Canadians Regulations must notify the CFIA immediately, and consumer product businesses must report incidents to Health Canada within two days. We place recall and contamination cover with specialist markets, and help you assemble the readiness evidence that underwriters price.
A recall costs money before anyone is hurt, and often when nobody is. Product recall insurance pays those costs. Wordings differ more between insurers than in most lines, but the cover usually comes in two parts.
Specialist markets have built recall cover for distinct product groups. Beazley, for example, launched recall cover in Canada in 2022 in three offerings: consumable products, consumer goods and component parts. Food and beverage cover is often called contamination insurance and can add malicious tampering and government-ordered recall.
Commercial general liability excludes recall costs on purpose. Standard Canadian wording excludes any loss, cost or expense for the loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal or disposal of your product, your work or impaired property, where it is withdrawn or recalled because of a known or suspected defect. This is often called the sistership exclusion.
Two neighbouring exclusions close the remaining doors. CGL excludes damage to your own product, and it excludes damage to impaired property: other goods that are less useful because they contain your defective product but are not physically injured. A retailer's lost shelf stock, or a customer's finished goods that have to be reworked because your component is suspect, usually falls here.
What CGL does pay is injury and physical damage to others. That is product liability, and it is the half of a defect event that recall cover does not address. Our CGL guide explains the rest of that policy.
Our manufacturing and wholesaling guide sets recall cover alongside the rest of a manufacturing program.
The trigger is the most important clause in a recall policy, and it is where wordings differ most. A recall is not automatically covered just because you carried one out.
| Trigger | What it means | What to check |
|---|---|---|
| Accidental contamination or defect | An error in production, formulation, labelling or packaging that makes the product harmful | Whether the product must be likely to cause injury, or only suspected to |
| Government-ordered recall | A regulator, such as Health Canada or the CFIA, orders or requests the recall | Whether voluntary recalls you start yourself are also covered |
| Malicious tampering | Deliberate contamination by an employee or outsider, or a credible threat to do so | Whether extortion threats and ransom are included |
| Mislabelling and undeclared allergens | Packaging that omits an allergen or gives wrong instructions | Whether labelling errors count as a defect under the wording |
| Component or ingredient failure | A supplier's input makes your finished product unsafe | Whether recovery against the supplier is preserved and how it interacts with your retention |
Ask how the policy decides which policy period responds. Recall wordings commonly tie coverage to when the recall or defect is first discovered or the recall is initiated, rather than to when injury occurs. That is a different system from CGL, so renewal gaps and retroactive dates matter.
Consumer products are regulated under the federal Canada Consumer Product Safety Act (CCPSA). Food is regulated under the Safe Food for Canadians Regulations (SFCR), enforced by the Canadian Food Inspection Agency. Both put duties on the business before any insurer is involved.
| Obligation | Consumer products (CCPSA) | Food (SFCR) |
|---|---|---|
| Records | Anyone who manufactures, imports, advertises, sells or tests a consumer product commercially keeps prescribed records for 6 years after the end of the year they relate to | Traceability records under Part 5 of the SFCR |
| Recall plan | Not set out in the sections cited; a written plan is the practical way to meet the 2-day and 10-day deadlines | A written recall procedure naming a responsible contact person (s. 84(1)) |
| Practice | Not set out in the sections cited | A recall simulation at least once every 12 months, documented and kept for 2 years (s. 84(2)) |
| Reporting | Information to Health Canada within 2 days of becoming aware of an incident, and a written report within 10 days (s. 14) | Notify the Minister immediately on deciding food should be recalled for a health risk (s. 84(3)) |
| Carrying out the recall | The Minister can order anyone who manufactures, imports or sells the product commercially to recall it (s. 31) | Implement the recall procedure immediately and document its effectiveness (s. 84(4)) |
| Sales after a recall | Selling or advertising a product subject to a recall order or voluntary safety recall is prohibited (s. 8) | The CFIA verifies removal and may ask for an ineffective recall to be repeated |
Under the CCPSA, an incident can include an occurrence outside Canada, so a problem reported elsewhere can start the clock here. The CFIA's recall guide for food businesses sets out a 12-step procedure, from assembling a recall team and notifying the CFIA through verifying effectiveness and a post-recall review.
Recalls are routine, not rare. The CFIA's statistics show 185 food recall incidents and 504 total food recalls in fiscal 2025-26, against 131 incidents and 233 recalls the year before. The CFIA attributes the jump mainly to secondary recalls linked to a Salmonella outbreak in imported pistachios and products made with them. Microbiological hazards caused 73 incidents and allergens 57.
Size the limit from your own numbers: units in the supply chain at any time, the cost of retrieving each unit, destruction costs, margin lost on a recall, and the worst case where a customer recalls finished goods that contain your ingredient. Our recall playbook shows how to estimate those costs.
| Excluded or limited | How to cover it |
|---|---|
| Bodily injury and property damage to others | Product liability under your CGL |
| Known defects before the policy started | Disclose at submission; not insurable once known |
| Recalls due to failure to meet shelf life or performance, without a safety risk | Usually not insurable; manage through quality control and contract terms |
| Deliberate breach of food safety or product regulation by management | Not insurable; documented compliance is the protection |
| Loss of market or brand value without a recall | Rehabilitation extensions, where offered, apply only after a covered recall |
| Spoilage from refrigeration breakdown | Equipment breakdown with spoilage cover, alongside your commercial property program |
| Goods damaged in transit | Cargo insurance |
| Lost income from a fire or other physical loss at your plant | Business interruption |
A serious defect produces two bills. Recall cover pays to stop the harm; liability cover pays for harm already done.
| Product recall | Product liability | |
|---|---|---|
| Who is paid | You, and in third-party wordings your customers | People injured or whose property was damaged |
| What it pays | Notification, retrieval, disposal, replacement, lost profit, rehabilitation | Damages and defence costs |
| Trigger | A covered recall decision, order or discovery | Injury or damage occurring during the policy period |
| Where it sits | Standalone recall or contamination policy | Products section of the CGL |
This scenario is hypothetical. An Ontario bakery supplies cookies to a regional grocery chain under its own label. A packaging line changeover puts a batch with tree nuts into packages labelled nut-free. A customer reports a reaction; no one is seriously hurt.
The bakery decides the product should be recalled for a health risk, notifies the CFIA immediately as the SFCR requires, and starts its recall procedure. Costs follow quickly: notices to every store, retrieval and destruction of three weeks of production across two provinces, the grocer's charge for pulling stock and refunding shoppers, overtime, and a crisis communications adviser.
With recall insurance carrying first-party and third-party cover, the policy pays the bakery's expenses and the grocer's recall charges above the retention, and the lost profit extension pays margin on the destroyed batch. The customer's reaction claim goes to the bakery's CGL products coverage. Without recall cover, the bakery pays the recall costs itself.
Recall premiums are set by specialist underwriters for each risk. There is no standard rate table, and the main inputs are:
Good recall data improves terms. An underwriter who sees a documented simulation that traced a lot in hours is pricing a smaller recall. We assemble the submission and market it to the recall markets that fit your products.
Insurabiz is an independent brokerage that works only in business insurance. Recall is a specialist line, and the wording matters more than the limit.
Our claims team works with you, the insurer and its consultants through the recall and the claim.
Good to know
Sources
This page is general information, not insurance or legal advice. Coverage depends on your policy wording and the insurer. Speak with a licensed broker about your situation.
Insurer partners
We shop these partners to find the right coverage and price for you.
Product Recall Insurance
Compare 17 insurers, no obligation
Speak with an advisor
A fast, no-obligation quote from Canada's commercial insurance specialists. Real advice, the whole market compared, and someone who picks up the phone.