The Strawberry Scare: Understanding Contaminated Product Insurance

According to this article from the ABC, police have been investigating four separate reports of needles being found in strawberry punnets in the homes of West Australians. This is a scary series of events for all of us (and thankfully, at least at the time of writing, no one has been injured), but it’s also a major concern for the businesses associated with this issue. A WA-based grower — Mal’s Black Label strawberries based in Gingin, 70km north of Perth — had earlier been drawn into the crisis when two of their punnets were found containing needles in supermarkets in South Australia. We thought it might be timely to discuss the insurance safety net that is designed to protect businesses and help them recover from an event such as this: Contaminated Product Insurance.

What is Contaminated Product Insurance?

Contaminated Product Insurance (CPI) can help manage the effects of a recall, covering key expenses and even PR consultants to guide the critical first weeks of a recall. CPI, according to information from AIG Australia, can cover events such as:

  • Accidental contamination (likely the opposite of what we’re seeing with the strawberry situation)
  • Adverse publicity – which is the reporting of either an actual or an alleged accidental OR malicious product tampering (more likely to be the case with the strawberries) where the insured product has been named
  • Intentionally impaired ingredients – this covers intentional and wrongful but not malicious contaminations or impairments – these occur as a result of a third party-supplied ingredient
  • Malicious product tampering – also likely to be a factor with the strawberries as it includes malicious alteration of an insured product
  • Product extortion – a threat to commit malicious product tampering that’s communicated to the insured party to demand money, property or services
  • Government recall – an official recall order to comply with food safety regulations

What kind of businesses could benefit from Contaminated Product Insurance?

The typical types of businesses involved would be manufacturers, distributors, suppliers, importers, wholesalers and retailers of products that are applied or ingested (such as food, beverage, beauty and pharmaceuticals.

Your insurance broker and the insurer will consider a number of factors to put together a CPI solution, including the industry and product type, turnover, number of production plants and lines, claims history, risk mitigation, quality control and business continuity/recall plans.

Find out more about Product Contamination Insurance

If you want to discuss your unique business needs, or for a free quote, contact Regional Insurance Professionals.

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