I copy-pasted the ingredients list from the client’s old Word doc, missing the “Contains: Peanuts” line for the new chocolate bar wrapper. The client printed 50,000 units and shipped them to grocery stores before a customer had an allergic reaction. The FDA mandated a total recall costing $75,000, and the client is looking at me to pay for the shipping, destruction, and re-printing of every single bar.
Key Takeaways
- Recall Exclusion: almost every standard E&O policy has a “Product Recall” exclusion. They pay for the lawsuit, not the logistics of the recall.
- Bodily Injury Gap: If the customer died or got sick (Bodily Injury), your Professional Liability might exclude it (sending it to General Liability), but General Liability might exclude it because it was a “Professional Service” error. You need a bridge.
- Proofing Sign-off: Did the client sign the proof? If they did, you have a 50% defense. If you didn’t get a signature, you are 100% liable.
- Consequential Damages: The client will sue for “Lost Shelf Space” revenue. This is insurable, but harder to prove.
The “Why”: The Recall Cost Trap
The Trap: Insurance covers Liability (money you owe because you were negligent). It hates covering Business Operations (the cost to ship boxes back).
Most Declarations pages list “Exclusion – Product Recall.”
This means if the client demands $75,000 for the physical act of recalling the chocolate, the insurance company will deny it. You need a specific “Product Recall Withdrawal Expense” endorsement, which is rare for graphic designers to have.
The Investigation: I Quoted 3 Major Carriers
1. Travelers (The Manufacturer’s Choice)
- My Analysis: Travelers understands the supply chain. You can buy a “Packaging Design” policy that includes a sub-limit for “Recall Expenses.” It’s not automatic; you have to ask for it.
2. The Hartford
- My Analysis: They will defend you against the “Bodily Injury” lawsuit (the allergy kid), but they will likely deny the $75,000 recall cost unless you have their “Super Stretch” endorsement for manufacturers (which a designer usually doesn’t buy).
3. CNA
- My Analysis: Very strong on “Consequential Damages.” If the client sues you for the profit they lost because the product wasn’t on the shelf, CNA is good at covering that financial loss, even if they won’t pay for the trucks to move the bad product.
[IMAGE: Diagram showing the difference between “Recall Expense” and “Third Party Damages”]
Comparison Table: Packaging Liability
| Carrier | Bodily Injury Defense? | Recall Costs Covered? | Best For… |
| Travelers | Yes | Yes (With Endorsement) | Packaging Designers |
| Hartford | Yes | Unlikely | General Designers |
| Basic BOP | No (GL Gap) | No | Web Designers |
Step-by-Step Action Plan
- Find the Signed Proof: If the client signed a document saying “I have reviewed the ingredients,” your liability drops massively.
- Notify Carrier of “Bodily Injury”: The allergy reaction is the trigger. Even if recall is excluded, the injury claim triggers the “Duty to Defend.”
- Do Not Admit Fault: Do not say “I forgot the line.” Say “The provided text was placed as requested.”
- Check for “Product Withdrawal” Endorsement: Look at your policy now. If you design packaging, call your agent and add this.
FAQ
I just designed the layout, not the text. Am I liable?
Yes. You are the final gatekeeper before print. The “Professional Standard of Care” implies you should check for mandatory warnings.
Does General Liability cover the allergy?
Maybe. But often GL excludes “Professional Services.” You need E&O with “Contingent Bodily Injury” coverage.
Will insurance pay for the reprint?
Only if you have “Rectification Coverage,” as discussed in previous articles.