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Contaminated products insurance for food and beverage companies

Our solution can support and complement your risk management strategy by minimising the financial repercussions of a product crisis and enabling brand recovery.

In today’s global marketplace, the risk of product recall in the food and beverage sector has never been greater.

Increasing regulatory scrutiny, pressured margins, complex supply chains, advanced technology and the proliferation of social media can lead to an increase in the occurrence and severity of product recalls

Some product defect risk can be mitigated using technology during production, but errors can affect even the most prestigious, global product manufacturers and brands.

Crisis planning and high-standard quality controls are key to mitigating the risk of product recall.

Insurance cannot replace effective business governance, but contaminated products insurance can support and complement an effective risk management strategy by minimising the financial repercussions of a product crisis and enabling brand recovery.

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How can contaminated products insurance help you?

Contaminated products insurance can help a company to protect:

  • Shareholder value
    Products recalls can have a significant effect on a company’s balance sheet, causing a cash shortage that can eliminate profit.
    We’ll work with you to make sure that product recall protection is embedded in your wider risk management strategy so that you meet your fiduciary duty to protect shareholder value.
  • Brand and reputation
    When risk management systems and controls do fail, what matters is how you respond and manage the event.
    We’ll help you ensure your investment in risk transfer includes any crisis support you may need to respond to crises, protect and rehabilitate your brand.
  • Costs expenditure
    Whether incurred by your company or a third party such as a direct customer. The costs to cover labour, transportation and disposal due to a product recall can be expensive. A product recall policy would typically
    cover these types of costs.

What can be covered?

Icon representing government recall/shutdown cover
Government recall/shutdown

Covers government-mandated recall and/or government shutdown of a manufacturing or processing facility.

Icon representing contamination cover
Contamination, whether actual or threatened

Perils can include accidental contamination, wilful but not malicious, and/or malicious product tamper, product extortion and adverse publicity.

Icon representing packaging defect cover
Packaging defect

Risks associated with errors in the design, manufacture, production or processing of packaging material.

Key coverage comparison

Please note below is a generalised comparison tool that selects a variety of covers where the triggers may be similar, but where discussion of the differences regarding cover will help understanding of our offering.

There are many derivatives of these wordings; it would not be possible to include every eventuality.

For this reason, while we have made every effort to ensure this is a fair comparison there may be examples where the below assessment is not accurate in some areas.

This is a guide only and professional advice should be sought from the appropriate professional before making any decisions based on this.

Recall expenses

Key coverage comparison for recall expenses
Coverage Specialised contaminated products Extended product liability
Recall costs ✔*
Physical/chemical analysis of product to establish cover
Inspection costs
Destruction costs
Product replacement costs
Slotting and re-slotting fees
Customer loss of profit

Rehabilitation of brand

Key coverage comparison for rehabilitation of brand
Coverage Specialised contaminated products Extended product liability
Public relations assistance
Promotional offers
Sales and marketing expenses
Point of sales notices
Advertising costs

Business interruption

Key coverage comparison for business interruption
Coverage Specialised contaminated products Extended product liability
12 Months loss of gross profit
Overheads including wages/salaries and depreciation of plant and machinery
Clean down and repair of machinery or plant
Subcontracting of manufacturing
All affected products included

Consultancy advice

Key coverage comparison for consultancy advice
Coverage Specialised contaminated products Extended product liability
Crisis consultancy with no deductible

Third party liability

Key coverage comparison for third party liability
Coverage Specialised contaminated products Extended product liability
Resulting from product liability litigation

Triggers

Key coverage comparison for triggers
Coverage Specialised contaminated products Extended product liability
Cover for product that 'would' cause bodily injury or damage
Recall ordered by government authority
Cover for alleged safety issues (adverse/negative media)

* Not given as standard and likely to be sublimited

Case study

No identification with actual persons (living or deceased), places, buildings, companies, entities or products is intended or should be inferred.

Beverage icon to represent case study
Pieces of glass found in beverages

An international beverage producer with annual sales of $100 million - received complaints that pieces of glass were present in one of their best-selling products.

The producer worked quickly to identify the affected batches and removed them from the shelves, refunding those that had already bought the product.

Several consumers had complained publicly on social media, leading to media about the contamination going viral.

The direct costs suffered by the producer were $8million and included contractual penalties to customers, PR and communication costs, the cost of recall, refunds and the cost of destruction.

In addition to this, the producer’s profits fell by $15 million due to the loss of attraction to their best-selling brand, causing it’s share value and ability to pay dividends to fall significantly.

Contaminated products insurance ensures a food and beverage company’s balance sheet is protected from events like these.

Third party expenses such as customer loss of profit and contractual penalties can be covered (often sub-limited), while the direct expenses an insured may suffer are also indemnified.

Critically, contaminated products insurance offers specialist crisis management services and brand rehabilitation costs, which allows an insured to respond to a crisis in the most appropriate way and regain their market share quickly, minimising the long term effects of a contamination event.

All names, characters, and incidents portrayed in the case studies are fictitious.

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