For a webshop, an importer or a smaller manufacturer, the most expensive day is not necessarily the day a product causes damage – but the day it has to be withdrawn from the market. Buyers have to be notified, and the items shipped back, stored, examined, replaced or destroyed, all within the authority's deadline. At this point many businesses reach for their product liability policy, and that is where they meet the bad news: it covers damage caused by a defective product, not the handling of a recall. What is more, since 13 December 2024 the European Union's General Product Safety Regulation (GPSR) has imposed detailed recall rules on webshops and importers as well, so the question has become pressing for SMEs too.
- Product liability applies to product damage as defined in Section 6:552 of the Hungarian Civil Code (Ptk.) – death, injury, damage to health and damage to other property caused by a defective product – and product liability insurance covers the same.
- The costs of a recall – notification, transport, storage, examination, replacement, destruction – fall outside this; separate product recall cover exists for them, typically as an add-on to product liability insurance.
- Under the GPSR, in a recall the consumer must be offered at least two of the options of repair, replacement and refund, free of charge – this cost falls on the economic operator.
What does product liability cover, and what not?
Under Sections 6:550 et seq. of the Hungarian Civil Code (Ptk.), the manufacturer of a defective product is liable for product damage – and an importer who brings the product into the European Economic Area also counts as a manufacturer. Under Section 6:552 of the Ptk., product damage means damage resulting from death, bodily injury or damage to health caused by a defective product, and damage caused to other property exceeding the forint equivalent of five hundred euros, if that property is intended for private use or private consumption. Damage arising in the defective product itself is not product damage: that is a matter of warranty and liability for defects (jótállás, szavatosság). Be prepared for these rules to change: the new EU Product Liability Directive ((EU) 2024/2853) must be transposed into Hungarian law by 9 December 2026, and according to the draft the concept of product will extend to software and the range of liable parties will widen – it is worth checking the text in force again at that point. Product liability insurance follows this structure: it provides cover for personal injury and property damage caused to others by a defective product, but typically not for replacing or repairing the product, recall costs or lost profit. Who is liable along the chain from manufacturer to webshop is explained in the product liability article; the limits of cover in general are shown in the map of cover.
What has the GPSR required since December 2024?
Regulation (EU) 2023/988 has applied to consumer products since 13 December 2024. Under Article 9, the manufacturer must take corrective action without delay – withdrawal or recall – if a product turns out to be dangerous, and must inform consumers and the authorities; importers and distributors have similar obligations to cooperate and report, and for a product of a manufacturer outside the EU, Article 16 requires a responsible person in the EU. Under Article 35, the economic operator must use the customer data it holds – for example webshop registrations or loyalty programmes – to notify consumers directly; Article 36 sets out the content of the recall notice, and Article 37 requires that the consumer be offered at least two of the options of repair, replacement and refund, free of charge and within a reasonable time. Under Article 20, accidents involving the product must be reported on the Safety Business Gateway portal. All of this is a cost that the legislation places on the business – and one that classic product liability insurance does not cover.
What does separate product recall cover pay for?
On the Hungarian market, recall cover can typically be taken out as an add-on to product liability insurance, with content that differs from one set of conditions to another. The typical scope of cover is the cost of a recall ordered by an authority (“third party recall”): the mailing and advertising costs of notifying holders, tracing and segregating the products, return transport, packaging and time-limited storage, the examination that decides the fate of the product, repair or replacement, and disposal. A voluntary recall decided by the business itself (“first party recall”) is excluded in many conditions or requires a separate extension; contractual penalties, fines, lost profit and image restoration are typically not covered. Another typical exclusion applies where the policyholder already knew about the defect before placing the product on the market, or where the problem is of a warranty nature – wear, insufficient durability, expired shelf life. The cover works with a per-event and an annual limit and a deductible, and the insurer pays only for what is an insured event under the contract. The article on extensions for an additional premium provides a decision framework for when such extensions are worth it.
Who is this a live issue for?
Primarily for those who manufacture or sell under their own brand name; for those who import from outside the EU – for them both the Ptk. and the GPSR assign the same liability as for the manufacturer –; and for webshops, which are often the only party in the chain holding customer data, so the burden of notification falls on them. For food, cosmetics, toys, electronics, children's equipment and machine parts, official recalls are more frequent in the first place. If you also ship abroad, customers often require recall cover in the contract – this is discussed in the article on foreign customers' requirements.
Frequent question: “A webshop is not a manufacturer – how does this affect me?”
From two directions. Under the product liability rules of the Ptk., if the manufacturer cannot be identified, the distributor must be regarded as the manufacturer until it names the manufacturer or the party from whom it obtained the product – so a webshop selling a product of unknown origin ordered from outside the EU can easily end up in the manufacturer's place. And the GPSR also expects the distributor, in the case of a dangerous product, to cooperate with the authority, arrange the withdrawal and pass the recall on to buyers – typically only the distributor has the consumer data. The practical consequence: a webshop's recall costs do not depend on whether it designed the product, but on the fact that it sold it and is the one able to reach the buyer.
What should you do in practice?
First, check what your existing policy covers: the recall exclusion in the product liability insurance, and whether there is any recall extension at all. Second, put in order what insurance does not solve: traceability based on lot or batch numbers, access to customer data, liability set out in supplier contracts, and the procedure for contact with the authorities – without these, the cover cannot work well either. Third, if your product range justifies it, request a quote for recall cover: the insurer will ask about the product range, turnover, markets and quality assurance. If you let me know, I prepare the request for quotes and the comparison of conditions; preparing the recall plan, notifying consumers and reporting to the authorities remain the business's own tasks.
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Sources
- Hungarian Civil Code (Ptk.) – Act V of 2013, Sections 6:550–6:559 (product liability) (njt.hu)
- Regulation (EU) 2023/988 on general product safety (GPSR) – EUR-Lex
- Allianz Hungária – Insurance of product recall ordered by a third party (third party recall), policy conditions (2011, docplayer mirror)
- felelossegbiztositas.hu – Product liability insurance (on the scope of product liability cover)
- Startr – What is worth knowing about product liability and product liability insurance
