Companies manufacturing, processing, filling, packaging or labelling pharmaceutical products for other businesses.

Where the sector’s exposures differ

The manufacturing steps accepted under a contract define the risk. A batch can be rejected without causing injury, while a contamination or labelling error may lead to injury or recall. Customers may demand recovery of raw materials, finished stock and lost sales beyond ordinary liability cover.

Insurance covers to assess

Review products liability, manufacturers’ errors and omissions, recall, liability for entrusted property and property or interruption cover. Check the treatment of faulty workmanship, the cost of redoing work, customer-supplied materials and contractually assumed liability.

Policy features to discuss

We can discuss the insured activities, insured entities, territorial limits, defence costs, excesses and aggregate limits offered by insurers. If a customer requests particular insurance, let us know so we can consider the available cover. Legal interpretation, drafting and negotiation of contracts should be handled by your legal adviser.

An illustrative exposure

A filling error leads a customer to reject a batch and seek lost revenue. If there is no injury or property damage, the claim may not fit a standard products liability trigger.

This is a hypothetical example to explain cover questions, not a Mercantile client case or a paid claim. The proposed policy must be assessed before assuming any response.

Information needed for a quotation

Manufacturing steps; who develops formulations and releases batches; GMP arrangements applicable to the work; customer-owned stock; contractual warranties; recall responsibilities.

Also provide turnover, wages, subcontractor and labour-hire costs, the legal entities to insure, existing schedules and wordings, claims or known circumstances, and planned changes. A clear activity breakdown helps us approach suitable markets and compare the terms offered.

Common questions

Does products liability cover every rejected batch?

No. Rework, replacement, performance guarantees and pure financial loss must be examined under the actual wording and relevant extensions.

Can Mercantile review existing insurance?

Yes. Send the schedule and wording together with a description of your activities and key contracts. We can examine significant gaps and approach suitable insurers, subject to their appetite and acceptance. We assist Australian businesses from our Norwest NSW office.

Related insurance sectors

Our service focuses on insurance placement and policy cover. Product classification, approvals and regulatory compliance are matters for your regulatory adviser or the relevant authority.

Return to pharmaceutical insurance or explore all Life Science insurance sectors.

• Pharmaceutical Manufacturer and Importer Insurance
• Pharmaceutical Licence Holder and Sponsor Insurance
• Pharmaceutical Distributor Insurance

Prepared by Mercantile Insurance Brokers. Updated 30 September 2026. General information for Australian businesses. Availability and cover depend on insurer acceptance, policy terms, exclusions, limits and deductibles.