With more than 6,000 craft breweries open and operational in the United States and another 1,500 in the planning process, the craft beer industry is not going anywhere. Since the brewery insurance is expanding, I don’t want you to overlook important coverage, product recall of your beer.
When you look at your brewery insurance policy and you are brewery that does distribute outside your taproom, you should see a coverage line for product recall. I have highlighted the word should because some policies that we seen do not have this coverage at all. I want to explain the difference between product recall expense and true product recall.
Product Recall (Withdrawal) Expense: This coverage means those reasonable and necessary extra expenses, listed below, paid and directly related to a “product withdrawal”.
- Cost of notification
- Cost of stationary, production of announcements
- Cost of overtime paid to your regular non-salaried employees and cost incurred by your employees including the costs of transportation and accommodations
- Costs of transportation, shipping and packaging
- Costs of warehouse or storage space
True Product Recall and Contamination: While product recalls and contaminations may be relatively rare; either case can be financially devastating and could even put your company out of business. By having this coverage your company will be helped with
- Advertising and promotional costs
- Shipping costs to collect recalled products
- Fees to wholesalers, distributors and retailers
- Business interruption costs
- Reputation repair and management costs
- The value of contaminated products
- Crisis response and consulting expenses, including public relations and recall consultants
As you can see in the true product recall and contamination, it covers the actual contaminated product and expenses to recall it back. This could be a huge expense if you have a big exposure that isn’t covered the correct way based on your product out in the market.
The main reason I am writing this is because I was just at a meeting with a craft beer business that is from out of state. His exposure was four times more than what he was actually covered for (without him knowing). If he would have had a loss he would have had to pay out of pocket the rest of loss. His current agent did not ask the correct questions to get him the correct coverage.
I remind you to keep an eye out for true product recall and contamination coverage on your brewery policy. If you have a big exposure and one of your products is recalled it can leave your brewery, winery, or distillery paying out of pocket to get things back in order.
Frimark/Keller & Associates does business in Illinois, Indiana, Wisconsin, Michigan, California and Florida. We have provided breweries insurance coverage since, 1910. We look forward to serving you with the right coverage for your brewery.