Food manufacturers face myriad risks every single day. With a greater focus on food safety and new regulations under the Food Safety Modernization Act (FSMA), the stakes are higher than ever.
Employees of food manufacturers risk injury every day as they work with dangerous equipment and machinery. Meanwhile, you rely on that machinery to function. If it is damaged or breaks down, the financial losses from ceased production and product spoilage can be devastating. You may lose revenue, be forced to dispose of product and inventory, or be sued by third parties who are harmed.
Spoilage, contamination, tampering and foodborne illnesses are serious – and deadly – concerns for food manufactures.
Food manufacturing companies of all kinds frequently experience product recalls that cost them millions of dollars. According to a 2011 Ernst & Young survey of 34 major food companies:
In some cases, it is not just one company that suffers from the effects of a product recall. In 2010, a recall of more than 500 million eggs cost the egg industry more than $100 million in lost income opportunity in one month alone. The recall came after nearly 2,500 illnesses were associated with the contaminated eggs.
Food manufacturers face spoilage, supply shortages, equipment breakdowns and recalls as well as many of the other property and liability risks that other types of manufacturers face. Every food manufacturer needs insurance policies that are tailored to their unique needs and the exposures that they have.
In general, food manufacturers may need to consider the following types of business insurance to protect property, customers, employees, vehicles and more from lawsuits, workplace injuries and other hazards that can be devastating.
Commercial property insurance helps protect your manufacturing facilities and their contents, from office equipment to heavy machinery, in the event of fire, weather events, theft, vandalism and other covered perils. In addition, you may need various other types of property coverage:
Commercial general liability (CGL) insurance provides broad liability protection for bodily injury and property damage to third parties caused by your negligence. You should also consider the following types of additional liability coverage:
Some of these can be purchased as endorsements to your CGL policy, while others might require a separate policy. All of these types of liability coverage can be tailored to the unique needs of your food manufacturing business.
Food manufacturers also need workers’ compensation insurance to protect employees from the costs associated with workplace injuries and illnesses. Your employees work in an inherently dangerous environment even if you have the most stringent safeguards in place. Your independent insurance agent can help you purchase the workers’ compensation insurance required by your state.
Product recalls are a risk for any manufacturer, and food manufacturers are no different. In recent years, food manufacturers are under increased scrutiny as the media and legislators have placed a great deal of attention on food safety. Product recall coverage is essential protection for food manufacturers.
If one of your products is recalled, the costs can be no less than disastrous. Some of the costs related to product recalls include these:
Product recall insurance can help you with many of these costs and perhaps even keep you from declaring bankruptcy or closing your doors. Product recall insurance typically reimburses a manufacturer for financial losses related to a product recall. For food manufacturers, this can be when a product is accidentally or maliciously contaminated and may cause bodily injury to a person who consumes it.
Product recall insurance reimburses you for these costs whether or not you were negligent in the contamination. Covered financial losses might include actual recall costs (product removal and disposal), loss of profit, product replacement, extra expenses and rehabilitation expenses.
There are numerous types of food manufacturers whose business models vary as much as their products do. For this reason, any company that engages in food manufacturing must enlist the help of an experienced, knowledgeable independent insurance agent who has experience working with businesses in the food industry. Your business faces far too many risks to entrust it to cookie-cutter coverage. You need a tailored food manufacturing insurance package that addresses your exposures with quality, comprehensive coverage from reputable insurance companies.
An independent insurance agent can work with numerous insurance companies until together you find the fight combination of coverage from a reliable company that you trust.