Food and beverage businesses have unique risks that most standard insurance policies may not cover, according to an Auckland-based insurance broker.

In a blog post, Marc Hershman, co-founder of Insurely NZ, wrote that having the right insurance policy means the difference between a business surviving or failing in case of a large claim.

Food and beverage manufacturers must ensure that their products are safe for consumption by their customers, and that these products meet regulatory standards, Hershman wrote. Risks such as food contamination issues, product recalls, manufacturing errors and packaging errors can be extremely costly to resolve and can potentially damage a business’ brand reputation, create legal liabilities and ultimately lead to the business’ downfall.

There are also risks that the wider community faces – fire, flood, cyber attacks, and equipment failure.

According to Hershman, a standard general liability policy will not address some of the following key liability risks for food and beverage businesses:

• Product recall, which includes the cost of replacement products and financial loss to third parties
• Package labelling errors (unintentional) that may or may not create risk of harm to customers
• Errors and omissions financial losses incurred by customers and third parties as a result of design, formulation or manufacturing errors
• Crisis management cover for specialist PR expenses, to help mitigate negative publicity generated by a crisis event
• Pollution damage cover for an insured’s own cleanup costs and compensation to third parties from a pollution event, including sudden and accidental pollution events and extending to cover slow and gradual pollution

“As a food and beverage manufacturer, you need to ensure that your business is protected from the unexpected,” Hershman wrote. “When it comes to insurance, you don't want to be caught off-guard by an unforeseen risk – that's why it's important to have the right coverage in place and the right advice to help manage your risks properly.”