News & Insights

Food producers, check your business interruption insurance cover

Published 12 December 2018

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, says 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 says. “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 says that wineries are one example of businesses that 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 is 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 insurance coverage that is flexible enough to move with the needs of the business particularly during different seasonal fluctuations. .

According to the Allianz Risk Barometer, a global study of the biggest risks for different industrial sectors, 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 says, but is vital for any business within the food sector.

Elms says that the most common losses that trigger business interruption claims 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) insulation.

“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 says. “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.”

Talk to our experienced food production insurance experts

Specialised industry knowledge means a food production insurance expert can identify the potential risks presented by the processes involved as well as the roll-on effects, such as the need for product recall, and collateral damage, to reputation, for example, and formulate a risk management and insurance cover program accordingly.


Our team of food production specialists calls on the Gallagher legacy of 75+ years in servicing food production enterprises, which means that whether you are a primary producer, in processing, transit or grocery wholesaling, we have deep understanding of the risks associated with each step of the supply chain and how to manage and mitigate them. 


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Further reading

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Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient’s industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers’ control.

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