PRODUCT: Product recall coverage

COMPANY: The Hanover Insurance Group, Inc.

BEST RATING: A (Excellent)

AVAILABILITY: Coverage is available to middle-market agents and brokers and small commercial agents licensed with The Hanover.

FOCUS: As product recalls become more frequent and extensive, manufacturers of all sizes are taking notice. With expenses beyond just the cost of retracting and replacing defective products, manufacturers that aren’t adequately prepared could be crippled.

While The Hanover has offered product withdrawal coverage for many years, according to Rob Brewer, vice president, middle market, a recent product expansion adds liability and additional expenses. “This provides broader coverage for those downstream effects,” Brewer says.

Additional covered expenses is an optional coverage that applies to three exposures not typically available from standard-market competitors, including:

• The costs of repairing, replacing or reimbursing defective products sold to customers.
• The lost profit the customer incurs due to the recall of the insured’s defective products, when a customer must return, repair or replace a defective product.
• Costs of restoring the insured’s brand reputation through messaging to customers and ultimate consumers.

The Hanover policy also incorporates a unique service component to assist manufacturing clients through the recall recovery process.

COVERAGE DETAILS: The company’s product recall coverage offers reimbursement for expenses related to removing a defective product from the marketplace, including shipping, transportation and disposal, as well as the cost of notifying customers. It also helps cover the cost of inspecting and testing defective products to determine if a recall is warranted.

The Hanover also offers the following optional coverages to further enhance product recall protection for manufacturers:

• Repair, replacement or repurchasing coverage: This covers costs incurred to repair a defective product, replace a defective product with a defect-free one or re-
  purchase a product. It can also cover the costs of redistributing and installing replacement products or parts.
• Customer’s lost profit coverage: This can protect manufacturers when a product recall causes a customer to lose profits they would have earned had there not been a recall.
• Good faith advertising coverage: This covers the costs of
  repairing a company’s damaged reputation after a product recall through paid advertising, social media and public relations services.

The Hanover also offers product recall liability coverage, which differs from its general liability insurance. This optional coverage offers protection if a company is sued for costs associated with a recall and covers claims for damages and legal representation costs.

These coverage enhancements are available for commercial package policies starting with renewal dates of Jan. 1, 2018.

UNDERWRITING: The preferred insured for this product has a rigorous quality control process in place and has planned in advance how to respond to recalls. Underwriting procedures include a supplemental application.

MINIMUM PREMIUM: N/A.

TARGET: Ideal clients are manufacturers in the food, auto parts and consumer products industries. The product is also available to manufacturers of parts, components or ingredients used by one of those industries, including metal fabricators, plastics or printers.

COVERAGE TERRITORY: Continental U.S., with global reach capabilities.

CONTACT: Rob Brewer, vice president, middle market; The Hanover, 440 Lincoln Street, Worcester, MA 01653.

Katie Butler is IA editor in chief.