What Brands Need to Know about CPG Insurance

The modern CPG brand is an outlier in the world of insurance. Traditional policies were built on the foundation of vertically integrated manufacturing and single source supply chain and distribution. Generalist agents were trained to use these existing forms because it was all that was available and most companies fit that mold. Today’s brands represent a new type of business, that is agile, scaling, and uses multiple partners to achieve a common goal of growth.

Because of the unique nature of the modern brand it is important to understand where your business might have an exposure to unwanted risk. Below is an outline of the most frequently referenced pain points around losses in the industry.

Review your contracts with your Co-man and 3PL:

Make sure you understand where your ownership of ingredients, inventory, and products begins and ends and how it is covered in the event of a loss. Being named “additional insured” on a 3rd party contract is not only a normal business practice, but should be viewed as a necessity in the relationship.

Property coverage limits:

Evaluate your inventory limits to confirm they accurately reflect the value of your finished goods, ingredients, and their storage locations.

Business Interruption:

If you are unable to operate your business due to a loss, a business interruption policy compensates you with the lost revenue. THis allows you to have money to continue operating the business.

Work Force:

Many companies utilize fractional, part time, and 1099 employees (teammates). Primary concerns are around Workers Comp coverage and Employment Practices coverage. Even if someone does not work for you full time you could still be found liable to carry WC coverage for them. Additionally, Employment Practices coverage is something no one ever expects to need/use (were all a family right), until the unforeseen happens and a teammate is no longer the right fit.

Reporting Information:

Whether it is a claim, ARR, ingredient list, or any number of other items they require. Getting the correct information to the insurance companies can make all the difference between a covered claim and a loss you pay for out of pocket.

Product Recall:

When a brand experiences a recall, the costs associated with a recall go well beyond just getting product off the shelves. Soft costs such as Legal fees, PR around the recall, and remanufacturing are all expenses you could have to absorb without the correct policy.

Working to secure your business is a decision that can prevent you from having to start over right as you’re hitting your stride. Putting the correct protections in place will allow you peace of mind to focus on the growth of your brand, rather than always worrying that disaster could be right around the corner.