Food producers should check their business interruption insurance cover as we move into summer to avoid underinsurance, a specialist has said.
Stephen Elms, National Head – Food Production at Gallagher, said that food producers should ensure they are fully covered if they carry more stock over the summer months.
“The summer months can be a busy time for many in the food production industry,” Elms said. “Producers should make sure that their business interruption cover matches the amount of stock they carry over the summer months to try and avoid underinsurance.”
Elms said that wineries are one example of businesses who should look at the amount of cover they currently have in place. The summer months are the busiest time of the year for wineries and many businesses will hold more stock to meet demand over the summer period.
If a winery has a business interruption policy that covers $1 million revenue cover, for example, but are holding more than $2 million of stock they could be left exposed due to their profit levels being higher during this period than what was declared previously.
Food producers should be challenging their broker to provide an insurance coverage that is flexible enough to move with the needs of the business particularly during different seasonal fluctuations. .
The most recent Allianz Risk Barometer, a global study of the biggest risks facing industrial sectors, states 53% of food and beverage producers named business interruption as their biggest risk – highlighting the importance of the issue.
Business interruption is a complex product, Elms said, but is vital for any business within the food sector.
Elms said that the most common losses that trigger a business interruption claim are fire and storm related. The food production industry both in Australia and around the world has faced a number of high profile, and high loss, fires over the past 18 months many due to the high combustibility of expanded polystyrene (EPS).
“With summer on the way and with it an increased risk of bushfire, producers should take the opportunity to review the level of cover currently in place, and with their broker, make sure they are protected to the correct levels required.
“Every one of my clients purchases business interruption cover,” Elms said. “It can be complex and not many people understand the complexity behind it but it is vitally important to the protection of any business. It really highlights why working with a specialist insurance broker is important for the food production industry.”