Batch · customer chain · own site
Liability insurance for the process industry
In a continuous process, one out-of-specification batch is rarely a small problem. It leaves the gate, is processed into someone else's product, and only there does the damage become visible.
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Deze pagina in het Nederlands: Aansprakelijkheidsverzekering voor de procesindustrie.
The calculator and the quote form below are in Dutch. Prefer to do this in English? Email info@finassverzekert. nl or call 072 - 509 24 56 and we will take it from there.
Work out for yourself what it would cost.
Enter your details; you will receive a proposal within one working day.
- We compare the offerings of several insurers
- An adviser checks whether the cover suits your activities
- We arrange the switch, including cancellation
A premium indication, not personal advice. Prefer to talk it through? Call 072 - 509 24 56.
In brief
The characteristic risk in the process industry is mixing. A raw material, semi-finished product or additive that falls outside specification disappears into a larger whole at your customer's plant. An additive that is off-spec makes a whole day's production unusable. A wrong batch contaminates a silo or an installation that then has to be cleaned. Damage to the property of your customer falls within the liability cover; replacing your own batch does not, because that is the item you supplied. For damage your product causes elsewhere there is product liability insurance.
On your own site something else is at play. A plant runs thanks to parties who are not your employees: maintenance contractors, cleaning firms, drivers unloading, engineers during a shutdown. If one of them is injured by the condition of your installation or by an act of your operators, you are liable as possessor under Article 6:174 of the Dutch Civil Code and, for anyone working under your supervision, under Article 7:658(4) of the Dutch Civil Code. The public and employers' liability insurance pays for that injury. The shutdown of your own plant is a matter for business interruption insurance.
Three items stay outside the cover that run up quickly here in particular. The costs of recalling, sorting and destroying a batch are not property damage and call for a separate section. The loss of production of a customer where nothing is damaged is pure financial loss. And gradual pollution through discharge, leakage or emission belongs on an environmental damage insurance.
This page deals with one situation. The full overview is on Compare public and employers' liability insurance (AVB).
What to look out for
Four points that determine the size of a claim at processing and manufacturing businesses.
Traceability limits the loss
If you can show for each batch which raw materials, which process settings and which customers belong to it, a problem stays confined to the parties involved. Where that record is missing, a far larger volume comes under suspicion and the claim rises accordingly. Batch records are therefore not a quality formality but a direct limitation of your liability.
Your terms of supply do half the work
A limitation of liability, a complaints period and an exclusion of consequential loss in your terms determine how far a customer can get. The condition is that you demonstrably declare them applicable in good time. Insurers ask about this at acceptance and take it into account in the premium.
Installations with their own liability regime
Pressure vessels, steam boilers, refrigeration and ammonia plant and storage tanks are subject to inspection. If such an installation fails and causes damage beyond your fence, the question is not only whether someone made a mistake, but whether the object met the standards that may be expected of it. The inspection file is the first thing that will be requested.
What a processing customer actually claims
Where a delivery is off-specification, the claim is rarely just the value of your batch. The customer adds cleaning costs, his own raw materials lost, downtime and sometimes a claim from his own customers. Only the damage to property part of that is insured. The rest is financial loss. Discuss in advance, therefore, what limit is realistic for your largest customer.
What does your premium depend on?
- Nature of the process: food, pharmaceuticals, chemicals or plastics give a different profile
- Turnover and supply chain: supplying the processing industry increases the consequential loss
- Payroll and number of contractors: decisive for the employers' liability part
- Quality assurance and traceability: batch records and release procedures are taken into account
- Cover for recall costs: a separate section with its own limit and conditions
- Area of cover: export outside the European Union is assessed separately
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| A driver unloads into the wrong tank, the contents react and he is injured | Provided that | No |
| Steam from a burst pipe damages a supplier's van on your site | Yes | No |
| An incorrectly dosed additive makes a customer's finished products unsaleable | Yes | No |
| Your process technologist advises a customer on a setting that halves his yield | No | Yes |
| Cleaning your own silo after two batches have become mixed in it | No | No |
| The penalty your customer himself received from his client because he could not deliver on time | No | No |
Batch records determine how large the third row becomes: without traceability a far larger volume comes under suspicion.
Frequently asked questions
This is what people ask us most.
Our raw material spoils a customer's production. What is covered?
Damage to his property, for example a finished product rendered unusable or an installation that has to be cleaned, falls within the liability cover. The value of the batch you supplied does not, because that is your own performance. The loss of turnover he suffers on top of that is pure financial loss and falls outside the policy unless it flows from covered property damage.
Are the costs of a product recall insured?
Not under the standard cover. Recalling, sorting, repacking and destroying are not damage to property. Some insurers offer a separate section for this with its own limit and requirements about when an action counts as necessary. In a chain with many customers that is one of the first subjects to discuss.
An engineer from a maintenance firm is injured in our plant. Who is liable?
You may well be, along two routes. As possessor of a defective installation under Article 6:174 of the Dutch Civil Code, and as principal of someone working under your supervision under Article 7:658(4) DCC. The fact that the engineer is employed by another firm does not stand in the way of this. Report such an accident to your insurer immediately; Article 7:941 DCC requires timely notification.
We discharge to the sewer within our permit. Is an incident then covered?
Staying within the permit says nothing about the cover. Liability insurance covers at most sudden and unforeseen pollution, and then usually only in connection with covered damage. Gradual pollution and the clean-up costs themselves fall under environmental damage insurance. Administrative fines or penalty payments are excluded on both policies.
Read more
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