Not cookie-cutter insurance definitions. Written by someone who's actually placed coverage for 100+ CPG brands — with the specific clauses that matter when a claim happens.
Most CPG founders don't know they're uninsured for recall until they're in the middle of one. This is the coverage that separates a survivable event from a company-ending one.
General Liability explicitly excludes recall expenses. Product Liability pays third-party claims — not the cost to get your product off shelves. Recall coverage is the only policy type that covers the actual logistics: notification, retrieval, disposal, re-manufacturing, lost revenue, and crisis PR.
Each policy type plays a different role in your risk architecture. Here's what each one does, who needs it, and when it actually pays out.
Your baseline policy. Covers bodily injury and property damage claims at demos, trade shows, co-packer facilities, and any physical location where your brand operates. Required by nearly every business relationship you'll have.
Covers third-party claims arising from your product causing bodily injury or property damage. Critical distinction from GL: this is product-specific, while GL is premises-specific. Often bundled — but always confirm it's explicitly included and that the limits are sufficient.
Pays the actual cost of a recall event: retrieval, disposal, re-manufacturing, notification, lost revenue, and crisis PR. This is the coverage explicitly excluded from both GL and Product Liability — and the one most founders don't have until it's too late.
Protects founders and board members personally from lawsuits arising from decisions made on behalf of the company — investor disputes, mismanagement claims, regulatory violations. Required by most institutional investors before closing a round.
Legally required in most states once you have employees. Covers medical expenses and lost wages for workplace injuries. The co-packer relationship creates a common misunderstanding: if workers are your employees (not the co-packer's), you own the workers' comp obligation.
Covers your physical assets: inventory at your co-packer, raw materials in transit, trade show equipment, and warehouse stock. Standard property coverage has location limits — inland marine covers goods while they're moving between locations.
Covers wrongful termination, harassment, discrimination, and wage disputes. General Liability specifically excludes employment-related claims. Once you have 10+ employees, the statistical likelihood of an EPLI claim justifies the premium — and the defense costs alone can be six figures.
Sits on top of your primary policies and pays when underlying limits are exhausted. The most cost-efficient way to significantly increase your coverage ceiling — a $5M umbrella policy typically costs far less than increasing your underlying limits by the same amount.
Covers data breach notification costs, regulatory fines, credit monitoring expenses, and business interruption from a cyberattack. Increasingly relevant for CPG brands operating DTC channels or storing consumer data. The average breach notification event costs $4.45M.
Not every policy is equally critical across verticals. Here's how the coverage priority shifts based on your product category and its specific risk profile.
| Coverage Type | Food | Beverage | Wellness | Beauty | Pet |
|---|---|---|---|---|---|
| General Liability | ● | ● | ● | ● | ● |
| Product Liability | ● | ● | ● | ● | ● |
| Product Recall | ● | ● | ● | ◕ | ● |
| Regulatory Defense | ◕ | ● | ● | ● | ◕ |
| D&O | ◕ | ◕ | ◕ | ◕ | ◕ |
| Property & Inland Marine | ● | ● | ◕ | ◕ | ● |
| Cyber Liability | ◕ | ◕ | ● | ● | ◕ |
Every policy is full of terms that sound clear but mean something very specific in a claim situation. Here's the glossary your broker probably never gave you.