@Risk Underwriting Pty Ltd understands the unique exposures of the food and beverage industry. Whether your business is a manufacturer, wholesaler, retailer or a distributor, each activity has its own distinctive exposures to consider.  

Contract manufacturer provides manufacturing services for companies that sell products versus services. Contract manufacturing is a form of outsourcing that continues to be in demand, especially in the food industry, where businesses face different risks and challenges when compared to other manufacturing companies. From the raw goods stage through processing, packaging and distribution, operations count on a variety of tools, procedures, and people.  

There are many moving parts in a manufacturing operation, and many food companies run into high expenses and challenges with quality when handling their own manufacturing, because they may not have the resources to meet demand requirements.  

Considering manufacturing is a driving force in today’s economy, there is a growing need for insurance and risk management services. One solution that can be offered under a Liability policy is a Manufacturers’ Errors and Omissions extension designed to cover businesses for manufacturing mistakes or negligent service resulting in third-party financial loss without bodily injury or property loss. It also ensures defense in case of possible legal proceedings and bears the costs incurred.  

Errors and omissions insurance helps protect business from claims of: 

• Negligence
• Errors in services given
• Omissions
• Misrepresentation
• Violation of goods faith and fair dealings

 To reduce the probability of errors and omission, the following risk reduction measures need to be considered: 

Always sign a contract. Contracts need to be clear defining obligations, deadlines, and compensation, to manage expectations from the start. It is essential to work with a legal representative to ensure that the contracts do not compromise the position of the business in the event of an incident.  

Leave paper trail. Document all communication with the clients, as well as any verbal communications. A paper trail helps clear up disagreements when parties to the contract are confronted with dispute.  

Be transparent. Manufacturers are to keep clients up to date on their progress and of any potential pitfalls, reducing the probability of any surprises, building trust between all parties.  

Communicate throughout the job and keep the expectations realistic.

Quality Control Procedures are in place with the use of internal and external audits to check compliance.  

Unlike general liability, errors and omissions is endorsed on a “claims made” basis with a retroactive period. This means that claims made against businesses on or after a certain date is not eligible for coverage. The extended reporting period helps cover claims filed within a certain period after policies expire.  

By not purchasing Errors and Omissions, a company can be taking a serious financial risk. These types of losses are not covered under a general liability policy and even if you are not at fault, litigation is both time consuming and expensive.