Sony Lithium-ion Battery Recall

After recalls by Dell and Apple Computer in August 2006, Sony announced a "Global Replacement Program" for notebook computer battery packs on September 28th. The recalls of lithium-ion batteries used in notebook computers most notably affects Dell, Apple and Toshiba. To date the recall exceeds 7 million batteries (more than 4.1 million recalled by Dell).

Sony stated that the recall is to address concerns of "recent overheating incidents". They explained that microscopic metal particles in the battery may come into contact with other parts of the battery cell leading to a short-circuit. Sony advised that when this occurs a battery would normally just power off, but in rare cases may overheat and cause flames.

Flames emitting from laptops were the subject of news reports spectacularly when one burst into flames at a Loss Angeles airport. It resulted in airlines banning their in-flight use.

News reports indicated Sony agreed to pay some of the costs of the recall advising investors in August that Dell and Apple recalls could cost between US$169million and US$254 million. Reuters report that the higher figure is "about one-fourth of Sony’s net profit for the current business year to March".

Along with the potential costs, the Sony brand was significantly affected and the share price dropped.

With less than a dozen actual incidents of battery incendiary, are the costs of recall, loss of profits and market share recoverable under any insurance policies?

In summary there would need to be appropriate Product Liability, Product Recall, and/or Product Integrity insurance.

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Published with permission of Claim Solutions Pty Ltd. 

Insurance Policy

Country: - United States

Policy Description: - Product Liability, Product Recall and/or Product Intergrity Insurance

Insurer: - Various

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