Product Recall Expenses Under CGL Insurance: Coverage Issues And Insights From A Recent Chinese Court Decision

I. Background

Commercial General Liability insurance (“CGL”) is one of the most widely used forms of commercial liability insurance internationally. Originating from the standardized policy forms developed by the Insurance Services Office (“ISO”) in the United States, CGL policies generally provide coverage for third-party claims arising from bodily injury or property damage caused by an “occurrence” in connection with the insured’s business operations. In China, CGL insurance has increasingly been adopted by manufacturing enterprises, particularly those engaged in export-oriented businesses. In many international supply chains, overseas customers or distributors require suppliers to maintain CGL coverage as a contractual prerequisite. For example, since March 2021, certain sellers on Amazon’s global e-commerce platform have been required to purchase and maintain commercial liability insurance once their sales exceed specified thresholds.