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Nestlé India not covered for recall

June 12, 2015 09:15 IST

MaggiInsurers are unlikely to pay for Nestlé India’s recall of Maggi noodles after states reported dangerous levels of monosodium glutamate and lead in samples because the company has a commercial general liability cover that can be claimed only if bodily injury is proved.

"Unless there is physical damage to any individual or health ailments are discovered after consumption of the product, compensation is not paid by the insurance company.

Here, only the food regulatory authorities have found lead in some samples," said an executive with an insurance company. An email to Nestlé did not elicit any response.

No legal proceedings have been initiated against Nestlé till now.

A product recall cover would have covered costs in this case, industry sources said. However, Nestle’s commercial general liability covers product and premise liability and not product recall.

"Even if there is a case seeking damages by the authorities concerned, the claim may not be paid unless an individual has faced adverse medical conditions due to consumption of the product," said the head of claims at a private general insurer. Insurers cover product recalls, including expenses, advertising, shipping costs and legal liability.

The premium for this cover depends on the size of the brand.

Recalls occur if there is a defect in design or operation that could cause harm. Food products can be recalled if there are any health hazards due to packaging or weather-related damages that make them unfit for consumption.

BS Reporter in Mumbai
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