Ice Cream Manufacturing Insurance

Insurance Options for Ice Cream and Frozen Dessert Manufacturers

Ann Herro | July 20, 2018
Automatic line for the production of ice cream popsicle

Eating ice cream and other frozen treats is one of life’s simple pleasures. As an ice cream and frozen dessert manufacturer, your products bring joy to millions of adults and kids every day. 

Your manufacturing process is complex, involving expensive, heavy equipment, precise recipes and processes, and strict adherence to health and safety standards. Yet anything can go wrong, from a fire in your plant to an unseen contaminant that finds its way into your products, harms consumers, and destroys your business. 

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Why Do I Need Ice Cream and Frozen Dessert Manufacturing Insurance? 

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

You need a variety of ice cream manufacturing insurance policies to act as a financial backup when you face losses due to:

  • Fire or smoke
  • Theft or vandalism
  • Windstorms, hail, or other severe weather events
  • Equipment breakdown and power/utility outages
  • Customer or vendor injuries or property damage on your premises
  • Auto accidents involving your trucks or vehicle fleet
  • Product spoilage
  • Product recalls
  • Consumer illness or death caused by your product
  • Other types of lawsuits or liability claims

Product Recalls Are a Huge Threat to Frozen Dessert 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 U.S. 

Blue Bell Creameries was forced to shut down production in April 2015 when 10 people were hospitalized and two people were killed after eating ice cream tainted with Listeria, which can cause severe stomach illness. The company was forced to recall more than 8 million gallons of ice cream and frozen desserts nationwide, and had to lay off more than 1,400 workers. 

A study by the Food Marketing Institute and the Grocery Manufacturers Association estimates that the average cost of a recall for a food manufacturer is $10 million—not including ongoing lost sales and reputational damage. Blue Bell paid out $850,000 in fines and an estimated $200 million in overall recall costs. 

Product Recall Insurance for Ice Cream and Frozen Dessert Manufacturers 

If one of your ice cream products is recalled, the costs can disastrous. Product recall costs can include:

  • Product removal (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

The aftermath of a recall can be long and costly. Your business may see ongoing costs for years in the form of decreased sales, reputational and brand harm, and decreased stock value.

Product recall insurance can help you stay afloat and recover by reimbursing you for financial losses related to recall. It covers things like:

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

Property Insurance for Ice Cream and Frozen Dessert 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 perils. 

In addition, you may need various other types of property coverage: 

  • Business interruption coverage, or business income coverage, protects your earnings if your business is unable to operate because of fire, hail, wind, equipment breakdown, etc. If you are forced to close your doors for a time 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 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 onsite. Ice cream 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 Ice Cream and Frozen Dessert 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 ice cream and frozen dessert 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 your ice cream factory is 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. 

Your employees face dangers at work every day, even if you have strict safety procedures in place. Workers’ compensation insurance protects employees from the costs of workplace injuries and illnesses. 

The Importance of Directors and Officers Liability Insurance for Ice Cream Manufacturers

After the Blue Bell recall, two shareholders sued Blue Bell and key members of its leadership team, alleging financial losses caused by their management decisions. 

According to the suit, executives and board members failed to maintain the necessary standards to produce and distribute Blue Bell’s products in a safe and sanitary manner. These failures led to the Listeria outbreak, subsequent recall, and millions of dollars in lost sales. 

This is where directors and officers (D&O) liability insurance comes in. It provides protection for directors and officers of companies against legal judgments and costs arising from a variety of different business decisions. 

In this case, key individuals at Blue Bell were held responsible for decisions that resulted in contaminated products reaching the market, and the financial consequences for shareholders. D&O liability coverage would pay for defense costs and any settlements or judgments that were required to be paid. 

How Much Does Ice Cream and Frozen Treat Manufacturing Insurance Cost? 

The cost of ice cream manufacturing insurance depends on several factors, including the size of your business and the types of policies you need to cover your unique risks. 

Some other variables that can impact the cost of business insurance include:

  • Number of employees
  • Types of manufacturing equipment
  • Size and location of your building 
  • 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 ice cream 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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