Recall of Products Claim Against Insured

Our insured is a distributor of womens designer dresses. The supplier of dresses to our insured claimed that the dresses were authentic, original, designer dresses. Our insured's customers, which are the retail stores, are claiming the products are not authentic and merchandise is being returned as not authentic. Does our insured as the distributor have any coverage (GL or Property) if a claim is made by the retailer against our insured, the distributor?

Ohio Subscriber

There is not going to be any CGL coverage because there has been no bodily injury or property damage or personal and advertising injury as defined in the policy. Moreover, exclusion (n) applies to damages claimed for the expenses incurred to recall or withdraw the named insured's products from the market.

As for property coverage, the answer is also “no”. Property coverage is for property on premises and not for property sold or distributed to others.

The insured will need a specialty type policy for coverage in this instance. Or, there is an ISO form, CG 00 66, product withdrawal coverage form. That form with endorsements might be what the insured needs in cases like this.

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