Cheese Manufacturing Insurance

How to Insure Your Cheese Manufacturing Business

Ann Herro
Workers at a dairy factory making cheese

Cheese comes in many varieties, and no two cheese manufacturers will use exactly the same ingredients and procedures. But in general, cheesemaking involves a long and complex process of:

  • Heating and cooling milk
  • Separating curds and whey
  • Adding ingredients like salt, enzymes, and “good bacteria”
  • Shaping, aging, storing, and packaging

Each of these steps must be perfectly executed in order to guarantee the quality, flavor, and safety of the final product.

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Why Do I Need Cheese Manufacturing Insurance? 

Anything can go wrong before, during, or after the cheese manufacturing process. 

  • Ingredients can be spoiled or tainted. 
  • Manufacturing equipment can break down, leading to a production stoppage. 
  • Refrigeration equipment can break down, leading to spoilage and product loss. 
  • Fires, weather events, and theft can damage your building or other property. 
  • Cheese that reaches the market can be unsafe and cause illness or even death.
  • Contaminated products may need to be recalled from the market. 
  • Customers or members of the general public can be injured on your premises.
  • One of your delivery trucks can cause an accident. 

You need a comprehensive set of cheese manufacturing insurance policies to act as a financial backup when you face financial losses from these types of events. 

Cheese manufacturing insurance can help you protect your assets from the costs of lawsuits, building and machinery damage, the immediate and long-term effects of a product recall, and more.

Product Recalls Are a Huge Threat to Cheese Manufacturers 

Food products can be recalled when they are contaminated by:

  • Some type of foreign object (glass, plastic, etc.) 
  • A toxin or microorganism (something that will make consumers sick)
  • Mislabeling (product contains an allergen, like tree nuts, that is not declared on the label)
  • Cross-contamination by varying ingredients in a shared factory space (tree nuts contaminate a product that should not have nuts)

Dairy products are the 4th most-recalled food category in the US. 

In February 2017, food inspectors found Listeria (dangerous bacteria) in a variety of cheeses produced by Deutsch Kase Haus LLC, an Indiana cheesemaker. The company manufactured cheeses to be sold under numerous brand names by retailers across the US. 

The recall quickly expanded to over 130 different types of cheeses and numerous well-known brands, including Sargento, Sara Lee, and Dutch Valley. 

While Deutch Kase issued a voluntary recall, the situation reverberated for months across the cheese industry, and caused huge losses for many of the company’s customers. Sargento Foods Inc. of Wisconsin not only recalled the affected cheeses, but also recalled additional products that were packaged on the same lines out of fear of cross-contamination. 

What’s more, Sargento and other cheese sellers permanently stopped using Deutsch Kase as a cheese supplier. 

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Product Recall Insurance for Cheese Manufacturers 

Product recalls can have devastating costs for any cheese manufacturer. Here are some of the costs you can expect to incur during and after a recall:

  • Product removal costs (pulling the product from the marketplace)
  • Product storage and disposal
  • Product replacement
  • Communications, including detailing the recall to public and government agencies, as well as continued public relations
  • Investigation (determining the source of the contamination)
  • Fines, legal fees, settlements, and judgments

As seen in the Duetch Kase Haus case, a recall can impact your bottom line for years. Customers may permanently abandon you, while your sales and stock price plummet. Repairing your reputation and restoring your brand’s good name may cost you more than anything else. 

Product recall insurance can help you with many of these costs, and might even help you avoid bankruptcy or closing your doors. It typically will reimburse a manufacturer for financial losses related to a product recall, including:

  • Actual recall costs (product removal and disposal)
  • Loss of profit
  • Product replacement
  • Extra expenses
  • Reputation rehabilitation expenses

Property Insurance for Cheese Manufacturers

Commercial property insurance helps protect your manufacturing facilities (buildings) and their contents (office equipment and heavy machinery) in the event of fire, weather events, theft, vandalism, and other covered events.

Talk to an agent about your need for additional property coverage, such as: 

  • Business interruption coverage, or business income coverage, protects your earnings if your business is unable to operate because fire, hail, wind, equipment breakdown, etc. If you are forced to close your doors for a while in order to make repairs, it pays for rent, employee salaries, lost income, relocation fees, and more. 
  • Utility interruption coverage reimburses you for costs related to breakdowns in utility services (water, electrical) that force you to temporarily stop production. 
  • Boiler and machinery, or equipment breakdown coverage, helps you repair or replace damaged machinery that is essential to keeping your production line working. 
  • Cargo and goods-in-transit coverage, including ocean marine coverage and/or inland marine coverage, protects your products as they are transported from place to place. 
  • Spoilage coverage offers financial protection for the costs of goods that spoil on-site. Cheese manufacturers have a huge spoilage risk. An agent can help you decide how much coverage you need and the types of situations that need to be covered. 
  • Additional flood, windstorm, or earthquake coverage may be necessary to protect your business property, depending upon your location.

Liability Insurance for Cheese Manufacturers

Commercial general liability (CGL) insurance provides broad liability protection for injuries and property damage that occur on your premises or because of your carelessness. 

If a customer is involved in an accident in your plant, your CGL coverage will pay for any related medical bills. CGL insurance also pays for repairs or a replacement if a customer’s personal property is damaged on your premises.

Additional liability coverage is probably necessary for your cheese manufacturing business. Talk to an agent about the following types of liability coverage:

  • Product liability insurance, including completed products coverage, helps you pay for losses or injuries to a user, buyer, or bystander caused by a defect or malfunction of your product. Dairy products are particularly vulnerable to product claims. If you are sued because a customer becomes ill because of your product, product liability coverage pays for damages and medical bills.
  • Environmental practices or pollution liability coverage protects companies from the costs associated with damage caused by improperly disposing of hazardous waste or causing environmental harm.
  • Commercial auto coverage is necessary if your business owns and operates any vehicles. It covers your vehicle fleet and drivers in the event of an accident or other vehicle damage that occurs as you transport your product from place to place. 
  • Excess liability coverage, or commercial umbrella coverage, provides liability protection above and beyond the liability coverage included in a commercial general liability and business auto policy. A commercial umbrella policy would pay when your other liability coverage has been exhausted. 
  • Directors and officers (D&O) liability insurance provides protection for directors and officers of companies against legal judgments and costs arising from a variety business decisions. Directors and officers of a cheese manufacturer could be sued and held responsible if their decisions resulted in contaminated products that caused harm to a consumer. 

Your cheese factory is a dangerous environment for your workers, even if you follow strict safety guidelines. In addition to your other cheese manufacturing insurance policies, you need workers’ compensation insurance to protect employees from the costs of workplace injuries and illnesses. 

How Much Does Cheese Manufacturing Insurance Cost? 

The size of your business and the types of policies you need to cover your unique risks determine the cost of your cheese manufacturing insurance. A variety of other variables also impact the cost of your business insurance, including:

  • Number of employees 
  • Types of manufacturing equipment
  • Size and location of your building
  • Number and type of trucks or other vehicles that you own 
  • Volume and geographical distribution of your products

Find and Compare Quotes

An independent agent can work with you one-on-one to determine the types and amounts of coverage you need. Your agent can get quotes from multiple insurance companies so you can evaluate the cost and coverage options and make the best choice. 

Benefits of an Independent Agent

Our agents simplify the search process for finding the right cheese manufacturing insurance. They’ll walk you through some handpicked policy options and explain the details.

Most importantly, they’ll be there for you when claim time comes. They know the ins and outs of the process and will make sure your claim is handled appropriately. 

TrustedChoice.com Article | Reviewed by Paul Martin

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