We’ve all seen the headlines: recalls for Salmonella-contaminated eggs, cinnamon with lead… the list goes on. Food product recalls are an unfortunate part of the industry, and the truth is that all food businesses (not just manufacturers) can be negatively affected by these incidents.
But you don’t have to go it alone! Product recall insurance can save you from taking a hit to your finances — and your reputation. In this guide, we’ll give you a clear-cut explanation of how you can protect your business with this important coverage.
What Product Recall Insurance Is (and Isn’t)
Product recall insurance is designed to cover the costs your business could face in the event of a voluntary or involuntary recall.
Here’s the difference between those two:
- Voluntary recall: You decide to recall products because of a suspected defect or contamination
- Involuntary recall: You are forced by the Food and Drug Administration (FDA) or the Food Safety and Inspection Service (FSIS) to recall products because of a suspected defect or contamination
A product may be recalled for a variety of reasons, including:
- Packaging defect (e.g., faulty heat seal)
- Labeling error (e.g., unlabeled allergen)
- Foreign object (e.g., plastic parts in ready-to-eat foods)
- Contamination (e.g., E. coli, Listeria, allergen, etc.)
What Does Product Recall Insurance Cover?
Product recall insurance can cover a variety of expenses needed to manage a recall, including:
- Customer notification
- Investigation into defective or contaminated product
- Product collection
- Product destruction or disposal
- Cost to hire a public relations (PR) or crisis management team
These expenses can add up quickly, with the most expensive recalls costing millions of dollars to handle.
What Does Product Recall Insurance Not Cover?
Every insurance policy has exclusions, including product recall coverage. Here are some expenses it typically won’t cover:
- Product recalls caused by banned substances, carcinogens, or lead
- Recall-related expenses that occurred outside of your policy period
- Prior knowledge of a product’s defectiveness or safety concerns before purchasing your policy
- Overhead costs
- Employee salaries
Always check your policy for an exact list of exclusions.
Product Liability Insurance vs Product Recall Insurance
You might be thinking: “I already have product liability insurance, do I really need product recall insurance?”
Despite their similar names, product liability and product recall coverage are not the same.
While product liability insurance does cover claims related to your food or beverage products, it only pays for bodily injury or property damage caused by your product. Recall-related expenses are not eligible for coverage under this policy.
Let’s take a closer look at the key differences between these two coverages.
| Product Liability Insurance | Food Product Recall Insurance | |
|---|---|---|
|
Primary Purpose |
Covers your legal responsibility if your product causes bodily injury or property damage to others |
Covers your financial losses from recalling a defective or contaminated product |
|
Coverage Trigger |
A claim or lawsuit filed by a customer or other third party |
A defect, safety concern, or contamination requiring you to remove that product from the market (voluntarily or involuntarily) |
|
Example Scenario |
A customer gets sick after eating your product and sues you |
You discover your product has been contaminated with dangerous bacteria, and you need to recall it |
|
What It Pays For |
|
|
|
Key Exclusions |
|
|
Product liability and product recall insurance can work together in the event of a recall. Where product liability covers medical bills and legal fees stemming from injured or sick customers, product recall coverage can pay for the cost of handling the recall itself.
Pro Tip: Check out our guide to food product liability insurance for more information on what is and isn’t covered.
The Truth About Who Needs Food Product Recall Insurance
It’s a common misconception that manufacturers and distributors are the only food or beverage businesses that need recall insurance. In reality, many types of businesses could be negatively impacted by a recall, including:
- Bakers
- Caterers
- Farmers market vendors
- Food and beverage vendors
- Food distributors
- Food manufacturers
- Food trailers
- Food trucks
- Home-based food businesses
- Restaurants
Recalls can happen to even the most careful businesses, regardless of size.
For example, consider a home-based baker who sources all their flour from a single supplier. One day, they receive a notification from their supplier that the flour has been recalled for potential Salmonella contamination. However, they’ve already used the flour in all of their products for the past two months.
Now, the baker has to contact all of their customers and collect their own affected products, even though they weren’t directly responsible for the recall. Having product recall insurance means those expenses are covered.
The Real Cost of a Recall
Beyond being expensive, recalls damage the trust you’ve worked hard to build with your customers.
When you have to recall a product due to safety concerns, your customers may feel nervous or reluctant to buy from you again. They aren’t sure if they can trust the quality of your products, and may look to other businesses or brands as a substitute.
This can lead to lost sales and serious reputational damage.
In addition to covering the logistics, product recall insurance can help you pay for an expert PR or crisis management team. These professionals can help you minimize the damage to your business’s reputation and sales, and reassure customers that you take their safety and satisfaction seriously.
Case Study: Mozzarella Recall Hurts Top Pizza Chains
In October 2025, Leprino Foods — a Colorado-based wholesale food supplier — recalled over five million pounds of mozzarella cheese over potential contamination of stainless steel pieces.
Leprino Foods supplies 85% of all cheese used by pizza chains across the U.S., including Papa John’s, Domino’s, and Pizza Hut. This recall affected pizza businesses across five states, though no injuries have been reported.
While manufacturing at Leprino Foods was the source of the recall, this incident directly impacted pizza chains that used cheese from this supplier. They could also face reputational damage and recall costs as a result, making product recall insurance crucial for avoiding a major financial blow.
Build a Resilient Business With Food Product Recall Coverage
Product recalls are par for the course in the food and beverage industry, but bouncing back from one of these incidents is what great businesses do. Having the right coverage shows customers that you’re financially prepared and ready to respond safely and efficiently if something goes wrong..
Insurance helps you recover from a potentially devastating event — one that may have been completely beyond your control. That’s why Food Liability Insurance Program (FLIP) is here to help with affordable product recall coverage.
FLIP’s policy starts as low as $109/year and can be easily bundled with any of our general liability insurance policies. Plus, you can get your quote and purchase a policy 100% online — no need to speak with an agent unless you want to.
Let us help you protect what you’ve built — get your free product recall insurance quote today!
FAQs About Food Product Recall Insurance
How Are Product Recall Premiums Calculated for Food Businesses?
While product recall insurance has a starting price, the following factors can affect the final cost of your premium:
- Which limits you select
- Your business’s gross annual revenue
- Your claims history
- Your location
What Are the Limits on FLIP’s Product Recall Insurance Policy?
FLIP offers two product recall aggregate limits (the maximum amount your policy will pay for all claims in a policy period):
- $10,000 aggregate — $109/yr.
- $25,000 aggregate — $129/yr.
How Fast Can Coverage Respond During a Recall?
The amount of time it takes for your policy to cover recall expenses depends on factors such as:
- When you file a claim
- How long it takes you to trace and collect recalled products
- How many products are affected by the recall
The best thing you can do to ensure a faster response is to file a claim as soon as possible.
Who Pays for Product Recall Expenses?
You, if you don’t have product recall insurance! Without the proper coverage, you will have to pay out of pocket for notifying customers, hiring crisis management, disposing of affected products, etc.
Alex Hastings
Seattle-based copywriter and (WA) licensed insurance agent Alex Hastings leverages her experience as a lover of fast-casual food, baked goods, and iced oat milk lattes. She holds a B.A. in Creative Writing from Western Washington University. Before working at Veracity, she was a retail copywriter at Zulily and an English language teacher in South Korea. Alex is fully trained on FLIP insurance coverages and writes content that connects food and beverage business owners with the policies they need.
Seattle-based copywriter and (WA) licensed insurance agent Alex Hastings leverages her experience as a lover of fast-casual food, baked goods, and iced oat milk lattes. She holds a B.A. in Creative Writing from Western Washington University. Before working at Veracity, she was a retail copywriter at Zulily and an English language teacher in South Korea. Alex is fully trained on FLIP insurance coverages and writes content that connects food and beverage business owners with the policies they need.
Kyle Jude
Kyle Jude is the Program Manager for Food Liability Insurance Program (FLIP). As a dedicated program manager with 10+ years of experience in the insurance industry, Kyle offers insight into different coverages for food and beverage business professionals who are looking to navigate business liability insurance.
Kyle Jude is the Program Manager for Food Liability Insurance Program (FLIP). As a dedicated program manager with 10+ years of experience in the insurance industry, Kyle offers insight into different coverages for food and beverage business professionals who are looking to navigate business liability insurance.