Claims are often described as the moment of truth in insurance, but no business wants to discover its insurance lacks essential cover when it's needed it most. It's critical for businesses to work with their broker to understand what their risk exposures are and to ensure that their business won't be under insured if the unexpected happens.

That was the situation facing a boutique beverage manufacturing business which discovered too late that the insurance program didn't include comprehensive cover for a product recall loss.

While public and products liability insurance provides cover for injury or illness damages claims caused by a faulty product, food and beverage producers typically also require standalone product recall insurance to comprehensively provide for issues that extend to contingent costs such as business interruption and reputational damage. This can be provided as an extension to standard business cover for food and beverage production businesses.

Beverage labelling issue not covered by product liability alone

In the case of the boutique beverage manufacturer the issue was a labelling problem that meant that the delivery had to be recalled.

Under the impression that it was covered for recall risk by its product liability insurance, the business found that it not only didn't have the appropriate product recall cover in place, but that the insurer didn't actually provide product recall insurance for its type of operation.

Since property insurance, liability cover and product recall represent the top three covers recommended for these types of businesses, the lack of product recall cover was a glaring omission and should have formed part of any initial conversation about the business's insurance needs.

Confronted by the realisation that they weren't covered for this type of event, the manufacturer turned to Gallagher for a review of their business insurance.

Finding a comprehensive insurance solution for production liabilities

After hearing about the situation Gallagher drew on our expertise in the food and beverage sector and the insurance programs we have previously provided to other beverage production businesses, especially in relation to potential liabilities.

Our Gallagher food and beverage production experts explained the business's exposures, including risk-rating of each exposure, and outlined a range of solutions available from the insurers that offer the required protections in this space.

Ultimately, we were able to put forward a simple solution with revised insurance values and an approach that has streamlined their public liability, product liability, errors and omissions, environmental impairment liability and product recall insurance into one policy.

This made it easier for the manufacturer to understand and manage their insurances — and they can now be confident that they are safeguarded against potential costs and losses and covered for any eventuality.

Tap our food and beverage production expertise

Our food production experts have the specific knowledge to help food and beverage production businesses mitigate your risks and minimise the impact of any losses to your business, whether you're a primary producer, a large-scale manufacturer or a niche specialism.

Talk to one of our brokers for an obligation free discussion of your insurance needs and to find out how Gallagher can help protect your business.

Disclaimer

Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient's industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers' control.

Gallagher publications may contain links to non-Gallagher websites that are created and controlled by other organisations. We claim no responsibility for the content of any linked website, or any link contained therein. The inclusion of any link does not imply endorsement by Gallagher, as we have no responsibility for information referenced in material owned and controlled by other parties. Gallagher strongly encourages you to review any separate terms of use and privacy policies governing use of these third party websites and resources.

Insurance brokerage and related services to be provided by Arthur J. Gallagher & Co (Aus) Limited (ABN 34 005 543 920). Australian Financial Services License (AFSL) No. 238312