About This Policy
This is a product recall and contamination policy. It pays your own costs and losses when your products have to be recalled, destroyed or withdrawn because they are, or may be, contaminated or unsafe. It is first-party insurance: it does not pay claims by other people for injury or damage your products cause, which your products liability insurance covers.
The Contaminated Products clause applies to every policy. The Defective Products clause applies only if the schedule shows it.
This policy covers insured events first discovered by you during the policy period and notified to us as the Discovery and Notification clause sets out.
This policy, together with your schedule and any endorsements shown in it, forms your contract of insurance with us. Where the schedule and this wording differ, the schedule applies. Words with special meanings are listed in the Definitions section.
This wording is written for businesses. It is not itself a Product Disclosure Statement. [WP REVIEW: confirm that product recall insurance is not a retail general insurance product under the Corporations Act 2001 (Cth) s.761G and the Corporations Regulations, so that no PDS or TMD is required.]
Version and Document History
This document is version-controlled. The version and date shown on the cover page and in the footer of each page govern this text. The version stated in your schedule as current at inception applies for the life of your policy period, unless your schedule or an endorsement states otherwise.
Schedule
(Completed separately for each policy. It contains your specific details.)
The schedule shows:
- The named insured and ABN, and the business
- The policy period, start and end dates
- The insured products
- The sections that apply
- The limit of liability in the aggregate, and the sub-limits for gross profit, rehabilitation costs, crisis consultant costs and any endorsement
- The retention for each insured event
- The indemnity period for gross profit and the rehabilitation period
- The geographical limits, where they differ from the definition of Geographical Limits
- The premium, the minimum premium, stamp duty and GST
- The state or territory whose law governs this policy (see the Governing Law condition)
- The endorsements that apply, by code, with their variables
Definitions
| Accidental Contamination | The accidental or unintentional contamination, impairment or mislabelling of an insured product during its manufacture, blending, packaging, labelling, storage or distribution by you or for you, including an undeclared allergen, a foreign object or a pathogen, which has caused, or would if consumed or used cause, bodily injury, sickness or death. |
| Business | The business described in the schedule. |
| Control Group | The chief executive officer, chief financial officer, head of quality or food safety, head of risk or insurance, and directors of a company that is an insured, or a person performing an equivalent role. |
| Crisis Consultant Costs | The reasonable fees and expenses of a crisis consultant approved by us, to advise you on responding to an insured event, including on the recall, communications and the steps to restore sales. |
| Defect | A fault in the design, manufacture, materials or labelling of an insured product that has caused, or would cause, bodily injury, sickness or death, or physical damage to property other than the product itself. |
| Endorsement | A change to this policy shown by its code in the schedule and set out in the Endorsement Library. |
| Geographical Limits | Insured products sold or distributed anywhere in the world except the USA and Canada, unless the E04 USA and Canada endorsement applies. |
| Government Recall | A compulsory recall ordered, or a recall publicly required, by a government authority under the Australian Consumer Law, the Food Standards Australia New Zealand Act 1991 (Cth), a state or territory food act, or any similar law where the insured products are sold, because an insured product is, or may be, unsafe. |
| Government Authority | A Commonwealth, state, territory or foreign government body, or a body established by law, with power to order or require the recall of products, including the Australian Competition and Consumer Commission, Food Standards Australia New Zealand and a state or territory food authority. |
| Gross Profit | The amount by which your turnover from the insured products exceeds the variable costs of producing and selling them, as shown in your accounts. The Gross Profit provision says how the loss is measured. |
| Indemnity Period | The period shown in the schedule, beginning when the insured event is first discovered, during which your loss of gross profit is covered. |
| Insured Event | Under the Contaminated Products clause, accidental contamination, malicious tampering or a government recall; under the Defective Products clause, a defect; and any further event an endorsement shown in the schedule adds. |
| Insured Products | The products described in the schedule that you manufacture, process, pack, import, distribute or sell, including their ingredients, components, packaging and labelling. |
| Limit of Liability | The amount shown in the schedule as the limit of liability. The Limit of Liability provision says how it and the sub-limits apply. |
| Loss | Recall costs, replacement costs, loss of gross profit, rehabilitation costs and crisis consultant costs covered by this policy. |
| Malicious Tampering | The actual or threatened intentional, malicious and wrongful alteration, contamination or mislabelling of an insured product by any person, including an employee, so that it has caused, or would cause, bodily injury, sickness or death. It does not include tampering by a member of your control group. |
| Named Insured | The person or entity named in the schedule as the insured. |
| Policy Period | The period shown in the schedule. |
| Recall | The withdrawal, removal or recovery of insured products from the market, from customers or from consumers, or their destruction, because of an insured event, including a trade recall and a consumer-level recall. |
| Recall Costs | Reasonable and necessary costs you incur in a recall, being the costs of:
They do not include your normal operating costs or the salaries of your permanent staff for their normal hours. |
| Rehabilitation Costs | Reasonable and necessary costs, incurred with our consent within the rehabilitation period shown in the schedule, to restore the sales or market share of the insured products to the level before the insured event, including advertising, promotions and price reductions. |
| Replacement Costs | The cost to you of replacing or refunding recalled insured products, or of repairing them where that costs less, at your cost of production or purchase, not their selling price. |
| Retention | The amount shown in the schedule as the retention, which you bear for each insured event, as set out in the Retention provision. |
| USA and Canada | The United States of America and Canada, and any territory or possession under the jurisdiction of either country. |
| We, Us, Our | The insurer named in the schedule as the insurer. |
| You, Your | The named insured and its subsidiaries under the Corporations Act 2001 (Cth) at the start of the policy period. |
What Is Covered
Contaminated Products
If an insured event under this section is first discovered by you during the policy period, we will pay:
- recall costs;
- replacement costs;
- your loss of gross profit during the indemnity period;
- rehabilitation costs; and
- crisis consultant costs, up to the sub-limit shown in the schedule,
arising from that insured event, in excess of the retention and up to the limit of liability.
Defective Products
This section applies only if the schedule shows it.
If you first discover a defect in an insured product during the policy period, and a recall is reasonably necessary to prevent bodily injury, sickness, death or property damage, we will pay the losses listed in the Contaminated Products clause arising from that defect, in excess of the retention and up to the limit of liability.
Discovery and Notification
An insured event is first discovered when a member of your control group first becomes aware of facts that would lead a reasonable person to believe that the insured event has happened. This policy covers insured events first discovered during the policy period and notified to us in writing during the policy period or within 30 days after it ends.
All insured events arising from the same, similar or related causes, or affecting the same production batch or the same product line in the same period, are one insured event, first discovered when the first of them was discovered, as the Related Insured Events provision sets out.
Costs to Prevent a Recall
We will also pay reasonable costs you incur, with our consent, to test, hold or segregate insured products after you discover facts that make an insured event reasonably likely, where doing so avoids or reduces a recall that this policy would have covered. These costs count towards the limit of liability and are subject to the retention.
What Is Not Covered
Claims Against You
Any claim against you for compensation for bodily injury, sickness, death or property damage caused by your products, and the costs of defending it. That is covered by products liability insurance.
Deliberate Acts
An insured event caused, or knowingly allowed, by a member of your control group.
Shelf Life and Deterioration
The ordinary deterioration, decomposition or spoilage of an insured product, or its sale after the use-by or best-before date or the end of its shelf life, unless it is caused by accidental contamination or malicious tampering.
Product Guarantee and Performance
The failure of an insured product to perform as intended, promised or represented, or to meet a specification, standard or claim made for it, where it is not unsafe; and any guarantee or promise of quality, fitness or efficacy.
Known Events
An insured event, or facts that would lead a reasonable person to expect one, that a member of your control group knew about before the start of the policy period.
Withdrawal Without a Safety Risk
A recall or withdrawal made only because of a defect in quality, appearance, taste or labelling that does not make the insured product unsafe, or only for commercial reasons.
Change in the Law
A recall caused by a change in a law, standard or regulation, or in its interpretation, after the insured product was made, unless the insured product was unsafe when it was made.
Fines and Penalties
Any fine, penalty, punitive, exemplary or aggravated damages, or civil pecuniary penalty, including under the Australian Consumer Law or a food act. We do not pay any amount that the law does not allow to be insured.
Loss of Market and Goodwill
Loss of market share, goodwill, reputation or future sales, other than loss of gross profit during the indemnity period and rehabilitation costs.
Excluded Products
Any insured product that is, or is part of, a motor vehicle or its parts, an aircraft or its parts, a medicine or medical device regulated by the Therapeutic Goods Administration, tobacco or vaping products, cannabis or cannabinoid products, or firearms, ammunition or weapons, unless the schedule names it.
Communicable Disease
A recall or loss arising from an epidemic or pandemic, or from a disease of animals or plants, declared by a government authority, other than accidental contamination of an insured product by a pathogen in your own operations.
USA and Canada
Insured products sold or distributed in the USA and Canada, unless the E04 USA and Canada endorsement applies.
War, Terrorism and Nuclear
Any loss arising directly or indirectly from:
- war, invasion, act of foreign enemy, hostilities or warlike operations (whether war is declared or not), civil war, rebellion, revolution, insurrection, or military or usurped power;
- an act of terrorism other than malicious tampering, meaning an act, or the threat of an act, that involves the use of force or violence, or harm to life, property or infrastructure, by any person or group, done or threatened for political, religious, ideological or similar purposes; or
- ionising radiation or contamination by radioactivity from any nuclear fuel or nuclear waste, or the radioactive, toxic, explosive or other hazardous properties of any nuclear assembly or component.
How the Exclusions Apply
We do not cover loss arising directly or indirectly from any of the matters in this section. Where an endorsement shown in the schedule writes back cover for a matter excluded here, the endorsement applies to the extent it says.
How We Pay
Limit of Liability
The most we will pay for all loss in the policy period, under all sections and endorsements together, is the limit of liability. It is an aggregate limit: each payment reduces it.
Within the limit of liability, the most we will pay for loss of gross profit, for rehabilitation costs, for crisis consultant costs, and under each endorsement, is the sub-limit shown in the schedule for it. A sub-limit is part of, and not in addition to, the limit of liability.
Related Insured Events
All insured events arising from the same, similar or related causes, or affecting the same production batch or product line, are one insured event, however many products, customers or recalls are involved. One insured event that continues over more than one policy period is treated as first discovered in the policy period in which it was first discovered, and the limit of liability, retention and terms of that policy period apply to all of it.
Retention
You bear the retention for each insured event, which applies to all loss together. Where one insured event is covered under more than one section, you bear only the highest applicable retention once.
Gross Profit
Your loss of gross profit is the reduction in your turnover from the insured products during the indemnity period, caused by the insured event, multiplied by your rate of gross profit in the twelve months before the insured event, less any costs that stop because of the reduction. We take account of the trend of the business and of any special circumstances that would have affected the turnover had the insured event not happened.
Other Insurance
If a loss covered by this policy is also covered by another policy, including the product recall extension of a products liability policy, we contribute with the other insurer in the proportion that our limit of liability bears to the total limits for that loss.
Recoveries
We may take over and conduct, in your name, any right of recovery you have for a loss we pay, including against a supplier whose ingredient, component or packaging caused the insured event. Any amount recovered, after the reasonable costs of the recovery, is applied first to us up to what we paid, and then to you, including for the retention. You must not give up any right of recovery after an insured event without our written consent, but you may agree in a written contract made before the insured event to limit your supplier's liability where that is usual in your trade.
Your Obligations
Tell Us Promptly
You must tell us as soon as reasonably practicable after you discover an insured event, or facts that make one reasonably likely, and before you begin a recall where you can do so without delay that increases the risk to people. You must also notify government authorities and customers when the law requires you to.
Your Recall Plan
You must keep a written recall plan and follow it, including any plan required by Standard 3.2.2 of the Australia New Zealand Food Standards Code, and keep records that let you trace the insured products one step forward and one step back. You must take reasonable precautions to prevent insured events.
Threats and Tampering
If you receive a threat of malicious tampering or a demand for money, you must tell the police as soon as reasonably practicable, keep the threat confidential except as the police or we agree, and follow the reasonable advice of the crisis consultant.
Cooperate With Us
You must give us the information, documents and access we reasonably ask for about any insured event, including your accounts for the calculation of gross profit, and help us pursue any recovery.
Keep This Insurance Confidential
You must take reasonable steps not to disclose the existence of this insurance to anyone other than your professional advisers, financiers and insurers, unless the law requires it.
General Conditions
Insurance Contracts Act 1984 (Cth)
Nothing in this policy excludes, restricts or modifies the operation of the Insurance Contracts Act 1984 (Cth). Where this policy is inconsistent with the Act, the Act prevails.
If this policy would otherwise let us refuse to pay a claim, in whole or in part, because of something you did or did not do after this policy was entered into, section 54 of the Act applies. We may not refuse to pay the claim only because of that act or omission. Our liability is reduced by the amount that fairly represents the extent to which our interests were prejudiced. Where the act or omission could reasonably be regarded as capable of causing or contributing to the loss, we may refuse to pay only the part of the claim that the act or omission caused or contributed to. We may not refuse any part that you prove the act or omission did not cause. This applies to every condition, exclusion, limit and obligation in this policy, not only to the claims conditions.
Your Duty of Disclosure
This is a contract of insurance for a business. It is not a consumer insurance contract. Before you enter into this policy with us, you have the duty of disclosure in section 21 of the Insurance Contracts Act 1984 (Cth): you must tell us every matter that you know, or that a reasonable person in the circumstances could be expected to know, is relevant to our decision whether to accept the risk of the insurance and, if so, on what terms. You have the same duty before you renew, extend, vary or reinstate this policy. For a company that is an insured, what it knows is what a member of its control group knows (see the definition of Control Group).
You do not need to tell us anything that reduces the risk we insure you for, that is common knowledge, that we know or should know as an insurer, or that we waive your duty to tell us about.
If you do not tell us something you are required to, we may reduce the amount we will pay you if you make a claim, or cancel this policy, or both, only as the Insurance Contracts Act 1984 (Cth) allows. If your failure is fraudulent, we may refuse to pay a claim and treat this policy as if it never existed. Disclosure is assessed separately for each insured, as the Individual Treatment of Insureds condition sets out.
Cancellation
You may cancel this policy at any time by telling us. We refund the premium for the unexpired period of insurance on a pro-rata basis, less any non-refundable government charges.
We may cancel this policy only as the Insurance Contracts Act 1984 (Cth) allows, by giving you written notice as that Act requires. We refund the premium for the unexpired period on a pro-rata basis.
Sanctions
We do not provide cover, pay any claim or provide any benefit under this policy to the extent that doing so would expose us to any sanction, prohibition or restriction under:
- the Autonomous Sanctions Act 2011 (Cth), the Charter of the United Nations Act 1945 (Cth), or regulations made under either Act; or
- the trade or economic sanctions laws of the United Kingdom, the United States of America or the European Union, to the extent they apply to us.
[WP REVIEW: confirm that naming the UK, US and EU regimes is appropriate for Australian capacity; this is a deliberate library-wide scope choice.]
Governing Law
This policy is governed by the law of the state or territory of Australia shown in the schedule for this purpose. If none is shown, it is governed by the law of the state or territory of the named insured's address shown in the schedule at the start of the policy period.
Jurisdiction
You and we submit to the non-exclusive jurisdiction of the courts of the state or territory whose law governs this policy under the Governing Law condition, and the courts that hear appeals from those courts.
GST
Tell us the extent of any input tax credit you are entitled to claim for the premium. If you do not, we will assume you are entitled to a full input tax credit. When we pay a claim, we will reduce our payment by any input tax credit you are entitled to for that payment, as required by the A New Tax System (Goods and Services Tax) Act 1999 (Cth).
Assignment
You cannot transfer this policy to another person or entity without our prior written consent.
Headings and References
Clauses in this policy are identified by their headings, not by numbers. A reference in this policy, the schedule, or an endorsement to a clause by its heading is a reference to the clause with that heading in the version of this policy that applies to you. Headings do not otherwise limit or extend the meaning of the clause they introduce.
Disputes and Complaints
If you are unhappy with a decision, please contact us. We will follow our internal dispute resolution process and try to resolve the matter within 30 days.
If you are not satisfied, you can refer the matter to the Australian Financial Complaints Authority (AFCA): www.afca.org.au, info@afca.org.au, 1800 931 678. AFCA provides a free and independent dispute resolution service. Time limits may apply.
Privacy
We collect your personal information to assess your application, administer your policy and handle claims, in accordance with the Privacy Act 1988 (Cth) and the Australian Privacy Principles. Our Privacy Policy is available on our website and on request.
Individual Treatment of Insureds
Each insured is treated as having a separate policy for every provision of this policy that depends on what an insured knew, intended, did or failed to do, including the Your Duty of Disclosure condition, the Deliberate Acts exclusion and the Known Events exclusion. The knowledge or conduct of a member of the control group of an entity is imputed to that entity, and to no other insured. Including more than one insured does not increase the limit of liability.
How to Make a Claim
Call us, using the emergency contact in the schedule, as soon as you discover an insured event. Then tell us in writing, as the Tell Us Promptly obligation sets out. If there is a risk to people, act first: start the recall your recall plan and the law require, and tell us as soon as you can.
How Product Recall Cover Works
This guide explains this policy. It does not change its terms.
Products liability insurance pays other people when your products injure them or damage their property. It does not pay your own costs of getting the products back. This policy does.
For example:
- a bakery finds that a batch of muesli bars labelled nut-free was made on a line used for peanuts. It recalls the batch from supermarkets. The policy pays the costs of the recall, the cost of the destroyed bars, the profit lost while the line is shut and sales recover, and a crisis consultant, less the retention;
- a beverage maker receives a threat that bottles on supermarket shelves have been poisoned. With Endorsement E02, the policy also pays the costs of responding to the threat;
- a cosmetics brand's moisturiser fails to meet its marketed shelf life but is not unsafe. That is a withdrawal without a safety risk, and it is not covered.
Tell us as soon as you discover a problem, and follow your recall plan.
Endorsement Library
An endorsement applies only if its code is shown in the schedule. Each endorsement changes this policy only as it states, and is read together with the variables shown for it in the schedule. Where an endorsement and the rest of this policy conflict, the endorsement applies to the extent of the conflict. If a variable an endorsement needs is not shown in the schedule, the default stated in the endorsement applies; if it has no default, the endorsement does not apply until we show the variable in the schedule. These endorsements are for use with this wording at version 1.0.x.
| Code | Endorsement | Effect |
|---|---|---|
| E01 | Third-party Recall Costs | Covers your customers' recall costs that you are legally liable for, to a sub-limit |
| E02 | Product Extortion | Covers threats of malicious tampering and extortion demands, to a sub-limit |
| E03 | Adverse Publicity | Covers loss when publicity about contamination of similar products stops your sales |
| E04 | USA and Canada | Covers insured products sold in the USA and Canada, to a sub-limit |
| E05 | Allergen Retention | Applies a higher retention to insured events caused by an undeclared allergen |
| E06 | Untraceable Products | Limits recall and replacement costs where the insured products cannot be traced by batch |
E01 Third-party Recall Costs
We will also pay the recall costs and replacement costs that your customers incur because of an insured event in an insured product you supplied to them, to the extent you are legally liable to reimburse them, whether under contract or otherwise, up to the sub-limit shown in the schedule for this endorsement. The Claims Against You exclusion still applies.
Schedule variables: the sub-limit; any named customers.
Questions
- What is the insured's role for these products?
qs.prc.products.role
Default rules (the first rule that matches applies; agencies may set their own actions and thresholds)
- When
qs.prc.products.role in ['contract_manufacturer', 'ingredient_supplier']: Suggest to the underwriter (quote not held)
Reason shown on the quote and schedule: Suggested because you make products or ingredients for other brand owners, who may recover their recall costs from you.
E02 Product Extortion
An insured event also includes a threat, made to you and communicated to us, to commit malicious tampering unless money or something else of value is paid. We will pay, up to the sub-limit shown in the schedule for this endorsement, the amount paid with our consent to meet the demand, the crisis consultant costs of responding to it, and your reasonable costs of investigating and responding to the threat, including the reward paid for information.
Schedule variables: the sub-limit.
Questions
- Are the insured products sold under the insured's brand, or a retailer's own label, through major supermarket or retail chains?
qs.prc.products.major_retail
Default rules (the first rule that matches applies; agencies may set their own actions and thresholds)
- When
qs.prc.products.major_retail == true: Suggest to the underwriter (quote not held)
Reason shown on the quote and schedule: Suggested because your branded products are sold through major retailers, which makes them a target for extortion.
E03 Adverse Publicity
An insured event also includes the publication, by a government authority or in the media, of a report that products of the same kind as an insured product, made by someone else, are contaminated, where the report causes a fall in your sales of the insured product even though it is not contaminated. We will pay your loss of gross profit and rehabilitation costs, up to the sub-limit shown in the schedule for this endorsement.
Schedule variables: the sub-limit; the indemnity period for this endorsement (default 90 days).
Questions
- Are the insured products sold under the insured's brand, or a retailer's own label, through major supermarket or retail chains?
qs.prc.products.major_retail
Default rules (the first rule that matches applies; agencies may set their own actions and thresholds)
- When
qs.prc.products.major_retail == true: Offer as a priced option
Reason shown on the quote and schedule: Offered because your branded products are sold through major retailers.
E04 USA and Canada
The USA and Canada exclusion does not apply, and the geographical limits include the USA and Canada, up to the sub-limit shown in the schedule for this endorsement for loss from insured products sold or distributed there.
Schedule variables: the sub-limit; any retention that applies instead of the policy retention.
Questions
- Are any insured products sold in the USA or Canada?
qs.prc.products.usa_canada_export
Default rules (the first rule that matches applies; agencies may set their own actions and thresholds)
- When
qs.prc.products.usa_canada_export == true: Refer to the underwriter, with the endorsement pre-selected
Underwriter responses (on a referral or suggestion): Attach; Attach with amended sub-limit; Attach with special excess; Attach with premium loading; Do not attach; Decline risk
Reason shown on the quote and schedule: Referred because you sell insured products in the USA or Canada.
E05 Allergen Retention
For an insured event caused by an allergen that is not declared on the label of the insured product, you bear the retention shown in the schedule for this endorsement instead of the policy retention. If no amount is shown, it is twice the policy retention.
Schedule variables: the allergen retention (default twice the policy retention).
Questions
- Are allergen-containing products made on shared lines without validated cleaning?
qs.prc.controls.allergen_shared_lines
Default rules (the first rule that matches applies; agencies may set their own actions and thresholds)
- When
qs.prc.controls.allergen_shared_lines == true: Apply automatically
Reason shown on the quote and schedule: Applies because allergen-containing products are made on shared lines without validated cleaning.
E06 Untraceable Products
Where the insured products affected by an insured event cannot be identified by production batch, we pay recall costs and replacement costs only for insured products made or supplied in the period before the insured event was discovered that is shown in the schedule for this endorsement. If no period is shown, it is 90 days.
Schedule variables: the period (default 90 days).
Questions
- Are all insured products coded so that each production batch can be identified and traced?
qs.prc.controls.batch_coding
Default rules (the first rule that matches applies; agencies may set their own actions and thresholds)
- When
qs.prc.controls.batch_coding == false: Refer to the underwriter, with the endorsement pre-selected
Underwriter responses (on a referral or suggestion): Attach; Attach with amended sub-limit; Attach with premium loading; Do not attach; Decline risk
Reason shown on the quote and schedule: Referred because the insured products are not coded so that a batch can be identified and traced.
Licence and Trademark Notice
This wording's text is licensed under Creative Commons Attribution 4.0 International (CC BY 4.0). The licence applies to the wording text only. It does not extend to, and no licence is granted in, the "Meridian" name, the Cuttleflow Systems name, logo, bearing mark, or any other trademark, trade dress, or brand asset, all of which remain the property of their respective owners and may not be used without separate permission.
An adopting agency's own schedule, endorsements, and other materials prepared for use with this wording are not required to be released under CC BY 4.0 merely because they are used together with this wording; CC BY 4.0 requires only that you attribute the wording text you use.
This wording is provided for general use and adaptation. Adopting agencies and their advisers are responsible for obtaining their own legal, regulatory, and reinsurance advice before use, and use of this wording requires the approval of the relevant capacity provider. Any Wording Partner review and sign-off letter issued in respect of this wording runs to Cuttleflow Pty Ltd t/a Cuttleflow Systems only and does not constitute legal advice to any adopting agency or insured.
Designed for the Australian market. Assumes application of the Insurance Contracts Act 1984 (Cth). Users are responsible for their own legal review, regulatory compliance, and reinsurance alignment.
Comments on this wording