Who Pays for a Product Recall?
The Hidden Risk for Importers & Manufacturers

Many Australian manufacturers and importers assume product recall risks only apply to negligent businesses or original manufacturers. In reality, recall liability can extend across the entire supply chain, affecting growers, importers, distributors and packaging partners alike.

Even if your internal quality controls are flawless, a third-party supplier’s mistake or malicious tampering can leave your brand holding the financial and reputational fallout.

Key Factors Driving Recall Exposure

Supply Chain Liability

Importers and distributors can bear responsibility for defects originating from overseas suppliers, third-party contractors or faulty packaging partners.

Rising Incident Rates

In 2025, Food Standards Australia New Zealand coordinated 92 food recalls, above the 10-year average. Many recalls stem from operational issues such as mislabelling, undeclared allergens or foreign object contamination, rather than faulty product design.

External Disruptions

Deliberate tampering, such as the 2018 strawberry crisis, demonstrates how external acts can damage harvests, revenue and business viability overnight, even where the business itself was not at fault.

Standard Policy Gaps

Traditional Public Liability and Product Liability policies generally respond to third-party injury or property damage. They do not necessarily cover direct recall costs, stock destruction, public notifications or crisis public relations expenses.

What Product Recall Insurance Covers

Dedicated product recall insurance is designed to help bridge the gap left by standard business insurance policies.

Cover can be arranged for businesses involved with consumable goods, including food and beverages, as well as general consumer products and component parts.

Key Takeaway

Product recall exposure does not stop with the original manufacturer. Importers, distributors and other businesses throughout the supply chain may face significant financial, operational and reputational consequences following a recall.

Reviewing your existing insurance arrangements can help identify whether your business has protection for the costs associated with a product recall.