Manufacturers on both sides of the Tasman routinely assume their product liability policy already covers the cost of pulling a faulty product from shelves. It usually doesn't, and that gap between liability and recall cover is exactly where brokers in Australia and New Zealand need to be doing the explaining.
In the food sector, annual recalls across the Australian and New Zealand market rose from 81 in 2015 to 95 in 2024, according to the joint regulator Food Standards Australia New Zealand (FSANZ). That's not a dramatic rise but these recalls are usually expensive to manage and those costs are only going up. One driver of recalls in the food sector - foodborne illness - illustrates just how financially damaging a recall event can be for a business. An FSANZ analysis from 2022 found that foodborne illness costs the Australian economy alone an estimated A$2.44 billion a year in lost productivity, healthcare costs and premature mortality.
New Zealand's own recent recall data underlines the same pressure from a different angle. New Zealand Food Safety coordinated 57 consumer-level food recalls in 2025, down from 88 the year before, with undeclared allergens the leading cause at 45.6 per cent of recalls and physical contamination the second most common trigger – including a metal-fragment incident traced to imported peanut flour that ultimately affected 27 different food products across several brands.
In an interview with Insurance Business about product recall challenges in Australia, Rebecca Bowman, claims manager, specialty at AXA XL Australia in Sydney, said most product liability policies don't also cover product quality issues.
"A client needs to be made aware that recall policies are there to protect their first party interests," she said. "Whereas product liability policies protect a client from third party legal liability."
Bowman said this is relevant to brokers and their clients when the affected product becomes an ingredient or component part to another product. She said most recall policies will cover the costs of the client's affected product and any recall costs, but these are often excluded under product liability policies.
"These potential uninsured costs can be considerable to a client and lead to further dispute between them and their customer, which is a risk to both businesses' operations and reputations should a recall not be effectively managed," said Bowman.
In the Australian market, that structural split shows up differently depending on the insurer. Chubb's Australian product recall cover is written strictly alongside a general liability policy. The insurer's most recently available online documentation states the recall product "is only written in conjunction with a General Liability policy" and "is not offered as a stand-alone product." AXA XL's recall cover, by contrast, sits as its own distinct first-party policy.
In New Zealand, the Ministry for Primary Industries warns businesses about the exposure directly. The ministry says recall costs "can run to many thousands of dollars" and recommends businesses consider whether recall insurance is right for them – a rare case of a regulator naming the coverage gap unprompted. It also recommends manufacturers and brand-owners agree in advance, contractually, on who is responsible for what if a recall becomes necessary – guidance that speaks directly to the ingredient-and-component exposure Bowman describes in the Australian market.
Even where a dedicated recall policy exists, the trigger point isn't automatic. Bowman pointed to contamination cases – roughly 85 per cent of AXA XL's Australian recall claims – where cover typically only responds once contamination is shown to cause injury, sickness, disease, death or property damage. Mould and listeria are common examples: not every strain is harmful, so a policyholder discovering either would need it tested against that bodily-injury trigger before a claim could proceed.
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New Zealand's own recall history shows the same dynamic playing out through allergen and physical-contamination cases rather than lawsuits over defective design. The 2025 peanut-flour incident is a case in point: a genuine contamination event affecting dozens of products, of exactly the kind a recall policy is built to respond to, and exactly the kind a liability policy typically is not.
"Every policy is different, so it's important that clients confirm with their broker exactly what their cover includes and where any gaps might be," Bowman said.
For brokers in both markets, the task is to map where liability cover stops and recall cover begins before an incident forces the client to find out the hard way, particularly where a product is a component or ingredient in something sold further down the supply chain.
