Legal Definitions - recall exclusion

Definition: Recall exclusion is a provision in some commercial general liability policies that excludes coverage for damages arising from the withdrawal, inspection, repair, replacement, or loss of use of the insured's product or work, to the extent that the product or work is withdrawn or recalled from the market because of a known or suspected defect or deficiency.

Example: Let's say a company manufactures a toy that is found to have a defect that could harm children. The company recalls the toy and offers refunds or replacements to customers. If the company has a recall exclusion in their liability policy, they may not be covered for any damages or lawsuits related to the recall.

This example illustrates how a recall exclusion can limit the coverage of a liability policy. In this case, the company may have to pay for any damages or lawsuits related to the toy recall out of their own pocket.