Learn about product contamination insurance for manufacturing businesses. Cosmetics, food, drink, pharmaceuticals, tobacco products & packers and distributors all run a higher risk of product contamination in their operations.
Product Contamination Insurance
Thanks to the diversification of trade and commerce throughout the last century, the needs and requirements of different businesses and their nature has evolved continuously. This also has led to diversification in the insurance industry, leading to the emergence of many types of insurance coverage that didn’t exist before.
In the food and manufacturing industries, product contamination insurance has become an industry standard and for good reasons too. This specific type of insurance policy is very similar to product liability insurance but has some distinct differences. It provides coverage for recall costs, media costs, third party expenses, loss on gross profit, value of the contaminated products, and a few other factors not included in product liability and recall insurance.
If you’re a part of this multi-billion dollar industry you should be well aware by now that contamination of products, whether accidental or intentional, are a very real hazard in the United States. Other than a few franchise giants like Coca-Cola, Pepsi, and Starbucks that can afford layered insurance coverage, most small and medium-sized enterprises in the food and manufacturing industry opt for a product contamination insurance policy.
Aside from bad media rep, a product contamination incident may also lead to hefty financial penalties for a business. So if you don’t have contamination insurance for your business, this article will offer are several compelling reasons you should consider.
Flexibility
Product contamination insurance is a very flexible affair which can act as standalone insurance policy or can be combined with product liability insurance policies. This allows for the reduction of insurance costs and increases the security and benefits of both insurance policies.
Protect Your Finances
This insurance policy is very handy due to the fact that if product contamination does occur, all the associated direct and indirect costs are recuperated by your insurance, including inspection fees, withdrawal fees, replacement fees and more, ensuring solid financial coverage in case such a scenario occurs.
Guard Against Contamination Threats
In the rare cases where threats are made to contaminate products, threat assessment procedures and costs are also covered in the insurance coverage. While not an everyday occurrence, this despicable criminal tactic is growing in popularity. In essence, an extortionist will threaten to contaminate a product unless their demands are met. With comprehensive product contamination insurance, however, you’ll never need to surrender to such threats because you’ll know that the costs to recall or inspect your product are covered.
Media Control
Thanks to the constant presence of social and news media everywhere, it is second to impossible nowadays to suppress any negative media attention. In event of a product contamination incident that could spell doom for your public relations, a solid insurance policy will help defray the cost of a positive media campaign to protect your company name, image, and brand.
Wide Range of Coverage
Product contamination insurance is not limited to manufacturing industries along. Restaurants and pharmaceutical companies are also equally susceptible to contamination accidents and are eligible to apply for contamination insurance. Pharmaceuticals, in particular, require contamination coverage these days due to potential public backlash and distrust that can easily accompany contaminated medications.
Typical Coverage for Product Contamination Insurance
While product contamination insurance can cover a lot of different incidents, here are the most typical.
- Accident Contamination: This involves the unintentional damage to a product or its packaging during manufacturing, distribution, or processing. It can include actual contamination or simply negative publicity suggesting contamination.
- Product Tampering: Product tampering is similar to “accidental contamination”, minus the accidental part. It involves the malicious contamination of a product, even when done by employees.
- Government Recall: When an official recall of a contaminated product would cause you losses, your product contamination insurance will protect you.
- Product Extortion: This coverage includes incidents in which a criminal threatens product contamination in order to extort you of money, service, property, or other assets.
Can My Business Afford Product Contamination Insurance?
Many business owners looking to save on overhead costs may think about cherry picking their insurance policies to only get the coverage they can afford. In truth, insurance policies for any company need to be factored into the cost of doing business from the very beginning.
If you find yourself asking if you can afford product contamination insurance, the real question you need to answer is if you can afford a product contamination lawsuit. Can you afford paying a law firm to defend you? Can you afford a cash settlement? Can you afford the damage to your brand? Can you afford the cost of a positive media campaign?
While the chances of product contamination might seem rare to you, that doesn’t make your company any more immune to them than any other business. Accidents happen. That’s what insurance is for.
Find the Product Contamination Insurance Your Company Needs
If you’re business is related to the food, pharmaceutical or manufacturing industries, by now you should have realized the importance of product contamination insurance. With a comprehensive product contamination insurance policy, you’ll be protected these costs and more in case of a crisis situation:
- Media and advertisement costs.
- Shipping costs for the reclamation of the damaged or contaminated products.
- Costs associated with the displacement or destruction of contaminated or faulty products.
- Costs associated with the replacement and redistribution of the damaged or contaminated products.
- Outstanding fees and bills of middlemen, retailers and wholesalers’ involved with the situation of product contamination.
- Expenses accrued due to the interruption in the business and production process.
- Expenses associated with crisis management and damage control caused by contamination incidents.
Product Contamination Insurance – The Bottom Line
We hope this article on product contamination insurance has been informative. If you are still looking for information, or are ready to invest the safety of your brand and your consumers, the agents at EK Insurance are ready to help you determine exactly what type of policy your business needs and provide you with a free, no obligation quote.