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Business insurance
Contaminated product insurance
Contamination product insurance protects businesses against losses resulting from accidental or malicious contamination of a product.
Product contaminations can cost millions in lost profits, decontamination and manufacturing delays. In addition to product recall costs, market share, brand image and consumer confidence are immediately at risk. There may even be civil or criminal charges as a result.
Regardless of how sophisticated your safety programme and quality management plans are, accidental contamination and product tampering do occur.
Who needs contaminated products insurance?
Contaminated products insurance is specifically designed for manufacturers of products used for human consumption.
This includes:
- food manufacturers
- drink manufacturers
- producers, suppliers and retailers of food and drinks
- pharmaceutical and cosmetic manufacturers
What does contaminated product insurance cover?
The policy normally consists of four parts relating to the business’ own products:
- accidental product contamination
- malicious product tampering
- government agency ordered product recall
- extortion
The coverage generally includes first party (the company itself) and third party (distributors and end customers) costs for product recall, replacement product, loss of gross profit, consultancy and publicity.The direct costs of recalling a product are often only a fraction of the true cost to the business.
Help with arranging contaminated product insurance
Could you afford to meet the cost of a contained product recall if you didn’t have cover? Do your clients expect you to hold contaminated product insurance? Could you lose clients if you’re not insured?
Our brokers can work with you to create a tailored, cost-effective insurance liability package that is right for your business. In the event of a claim, they'll advocate on your behalf for a fair and prompt result.
CLAIM EXAMPLES
Winery
After glass particles were found in several bottles of wine, a winery decided to recall 4,000 cases (48,000 bottles). It was found that the capping machine was incorrectly adjusted and applied too much pressure during the capping process. In frequent cases this had resulted in chipping the glass neck under the cap.
Loss of gross profit together with disposal and replacement costs amounted to hundreds of thousands of dollars, with further costs for recall and consultants .
Snack food
A snack food manufacturer received customer complaints about metal contamination in the product. Investigation revealed that the problem was caused by a worn-out belt during manufacturing. The product was recalled both nationally and internationally, at great expense.
Costs were incurred for:
- recall of the product (recovery, transport, testing, disposal)
- replacement of affected products
- business interruption (lost supplier contract and market share)
- PR and advertising rehabilitation expenses (marketing campaign)
This was all covered by contaminated product insurance.