Consumer packaged goods is a vast industry that is reliant on customer persuasion. Everyday staples within the CPG industry fluctuate alongside consumer popularity, and this business niche spans industries of all types. Because CPG is such an expansive concept, competition is intense as companies attempt to remain the top choice to sell to retailers who sell to customers.
To remain competitive, it is wise for CPG-focused businesses to consider their marketing and finance strategies and insurance coverage. Failure to properly protect against the nuanced risks inherent in this industry can result in significant financial harm that threatens future success.
Here is an overview of the insurance needs most common in CPG companies, including which policies are effective for most CPG businesses.
Why CPG Companies Need Insurance
The inescapable reality of consumer packaged goods is that most will have a short lifespan. Products include food or beverage items, frequently used cleaners, and common hygiene products. While their quick production schedule lowers costs, it also typically decreases durability and increases the chance of mistakes or possible product recalls.
CPG companies such as Nestle, PepsiCo, General Mills, and many more span a wide range of potential products—and therefore risks—so their insurance policies need to cater individually to their target product range and production methods.
Some of the most common threats faced by these entities include cyber-attacks, physical damage to property, damage to transport vehicles, and injury to workers. Consider the following protections as standard throughout the CPG industry:
Commercial Auto
CPG transport is an important part of the industry, ensuring that popular products reach store shelves nationwide. If auto accidents occur, commercial auto insurance can cover damage to the vehicles involved and keep product transport on schedule.
Commercial Property
Buildings and production are the locus of a CPG company’s profits, and these locations need coverage against damage, loss of equipment or inventory caused by natural disasters, theft, vandalism, and similar risks.
Due to the highly competitive nature of the CPG industry, facilities lacking this coverage may quickly find themselves irrelevant if they must pause production to address a property issue without insurance.
Business Interruption
Suppose an unexpected event should occur that stops production. In that case, business interruption insurance will support the brand during its recovery to keep profits consistent. This is essential for CPG businesses, who rely on consistent output of popular products to stay relevant.
Cyber Liability
As in many other industries, technology plays a bigger role than ever in CPG. Increased online connection, automation, and data storage leave businesses vulnerable to breaches and hacking.
Sensitive personal or proprietary information could be extracted from CPG databases, and insurance is the best method of protecting against the financial repercussions of an unexpected cyber attack.
General Liability
General liability insurance is non-negotiable for large businesses. Suppose an individual, such as a delivery driver or third-party vendor connection, visited your premises and tripped over a misplaced item.
General liability insurance covers any costs associated with an injury on your business property, as well as damage you cause to the property of others.
Product Liability
Product liability insurance is essential for CPG production; it covers damage caused by defects and product recalls. Whether the product causes illness, physical harm, or some other unacceptable consequence, product liability insurance will help to pay for customers’ medical treatment and cover fees and claims.
Product Recall Insurance
Similar to product liability coverage, product recall insurance deals with defective goods. A physical product recall can be costly due to the logistics involved, and this type of coverage addresses the cost of retrieving defective goods from stores and attending to any other concerns tied to removing the product from circulation.
Workers’ Compensation
Workers’ compensation insurance is a precautionary coverage should an employee be injured on the job. This protection can cover medical bills associated with the injury, time off from work, rehabilitative services, physical therapy, and compensation to the family if an individual passes away from the incident.
Get Tailored CPG Insurance From Industry Experts
Consumer packaged goods is a continuously changing industry calling for specialized insurance coverage to protect a business’ location, employees, consumers, and more. Finding the ideal combination of necessary insurance protection without unnecessary cost is best achieved with the help of industry experts.
The professionals at MFE Insurance can guide you through the choices and create a personalized blend of coverage that addresses your unique needs as a CPG provider. Contact MFE Insurance to schedule an appointment or learn more about the various protections offered.