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Contaminated product insurance
Cover goods for accidental or intentional contamination
Contaminated product insurance protects businesses against losses resulting from accidental or malicious contamination of a product.
Product contamination can result in millions of dollars in lost profits, decontamination costs, and manufacturing delays. In addition to product recall costs, market share, brand reputation, and consumer confidence are also immediately at risk. There may even be civil or criminal charges as a result.
Regardless of how sophisticated your food safety, quality, and risk 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 product contamination insurance cover?
The policy normally consists of four parts relating to the business’s own products:
- Accidental 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, so it’s important to get proper protection.
Help with arranging contaminated product insurance
Could you afford to meet the cost of a contained product recall if you didn’t have coverage? Do your clients expect you to hold contaminated product insurance cover? 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 solution.
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 discovered that the capping machine was incorrectly adjusted during manufacturing, resulting in excessive pressure during the capping process. In frequent cases, this had resulted in chipping the glass neck under the cap.
The loss of gross profit, together with disposal and replacement costs, amounted to hundreds of thousands of dollars, with consultants and recall costs incurring extra fees.
Snack food
A snack food manufacturer received customer complaints about metal contamination in the product. The investigation revealed that the problem was caused by a worn-out belt during manufacturing. The product was recalled both nationally and internationally, incurring significant expenses.
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.
Work with our insurance brokers to get protection
Minimise risk in the event of product recall with expert insurance advice from our specialist insurance brokers. Improve your business’s crisis management with contaminated product insurance.
Contact us today and we’ll provide guidance on the most suitable option for you.
