Contamination insurance has been on the rise in Belgium since the Dioxin Affair in 1999, when toxic dioxins entered the food chain through feedstock. Large food corporations and firms in the distribution, pharmaceutical, production and packaging industries are all aware that product recalls can have a serious financial impact.
Contamination insurance fills a significant gap in the traditional liability policy, which only covers third-party injuries and material damage.
For example, when eating a toxic egg makes you ill, the firm responsible can call on its liability insurance to bear the financial consequences of you ingesting a toxic substance (hospital expenses, legal costs, etc.).
However, when a firm causes large-scale contamination endangering public health or affecting the production or distribution process of other firms, the traditional liability policy will not offer any relief. Contamination insurance will help a firm to recall or destroy contaminated products or absorb its own loss of profits.
Unlike traditional liability insurance, recall and contamination insurance does not rely on fault liability (fault, claim and causal link) to provide cover. When the public-health standard is exceeded, this is regarded as a sufficient trigger to use the recall insurance policy.
Contamination insurance covers all recall costs, but goes much further than that. The policy also covers the following costs:
- Destruction and replacement costs (the costs of replacing recalled products with products of equal value)
- Redistribution costs
- Loss of profits (loss of gross profit)
- Rehabilitation costs (costs incurred to rebuild your image with consumers and suppliers in marketing campaigns, for example)
- Extortion costs (ransom)
- Fees for consultants and experts.
Is contamination insurance also crucial to your firm? Our specialists will be happy to advise you. Do not hesitate to contact us at firstname.lastname@example.org or on +32 3 217 56 99.