Peanut Butter Manufacturing Insurance

Don't Get Stuck Without Peanut Butter Manufacturing Insurance

Ann Herro | August 15, 2018

Peanut butter has long been a dietary staple, and has become even more popular in recent years as an excellent source of protein. Whether you like it creamy or crunchy, on toast or with jelly, peanut butter is delicious and satisfying for kids and adults alike. 

Companies that process peanuts and manufacture peanut butter come in all sizes. Most produce peanut butter for retail and commercial use and distribute their peanut butter products to grocery wholesalers, supermarkets, specialty food stores, and food service contractors. Find an independent insurance agent now, and get one-on-one consultation and affordable options for the best coverage for your unique needs. 

Why Do I Need Peanut Butter Manufacturing Insurance? 

Business insurance acts as a financial backup when you face certain losses. Your peanut butter manufacturing insurance policies should be designed to protect against the specific risks you face that are unique to the peanut manufacturing business. 

Manufacturing peanut butter is a complex process of roasting, blanching, cooling, grinding and seasoning peanuts to produce the final product. Peanut butter manufacturers use a variety of specialized machinery to ensure that the product taste and texture is appropriate, and above all, that the peanut butter is free from contamination and safe to consume. 

At any point in the process, something can go wrong. Machines can break, contaminants can be inadvertently introduced into the peanut butter, and other outside forces can hinder your ability to operate. 

You can expect serious financial losses when you experience property loss or damage. You can also be subjected to costly liability claims and lawsuits, product recalls, accidents involving your vehicle fleet, equipment breakdowns, business interruptions, and more.

How would you recover if your peanut manufacturing business experienced any of the following?

  • Fire or smoke damage to your factory, plant, warehouse, or offices
  • Theft or vandalism of manufacturing equipment, inventory, materials, computers, office space, delivery trucks, or any other business property
  • Windstorms, tornadoes, hail, or other severe weather events that damage or destroy your property, vehicles, or ability to operate
  • Breakdown of or damage to roasters, tanks, pumps, mixers, homogenizers, grinding machines, or other essential manufacturing equipment 
  • Power or utility outages that cause a production stoppage
  • Auto accidents involving your trucks or vehicle fleet
  • Product spoilage
  • Product recalls
  • Consumer illness or death caused by your peanut butter products
  • Other types of lawsuits or liability claims 

Product Contamination and Recalls Are a Serious Threat to Your Livelihood

According to a recent survey by Ernst & Young, 55% of companies surveyed had experienced a product recall in the past 5 years. These companies ranked the risk of a product recall as among their most serious strategic threats, with 81% calling the financial exposure “significant” and “catastrophic.” 

Peanut butter manufacturers are no stranger to product recalls. In fact, peanut butter was involved in two of the largest and deadliest product contamination cases in U.S. history.

  • In 2009, a Salmonella outbreak in peanuts resulted in 9 deaths and at least 714 illnesses. The contamination led to the most extensive food recall in U.S. history, involving 46 states, 360 companies, and more than 3,900 different products using peanuts or peanut products that were processed by the Peanut Corporation of America, where the outbreak originated. By February of 2009, the company had ceased operations, and later  filed for Chapter 7 bankruptcy. It was ultimately the subject of dozens of civil lawsuits and a criminal investigation.
  • The nation’s largest producer of organic peanut butter, Sunland Inc., was in 2012 the source of a Salmonella outbreak that sickened 42 people in 20 states. After a voluntary recall of its organic peanut butter, the company ultimately filed for Chapter 7 bankruptcy protection. It was named in several civil lawsuits related to the contamination.

How Can Product Recall Insurance Help? 

Many otherwise strong companies have collapsed under the weight of a product recall. The financial costs of removing the product from the market, disposing of the product, and containing the public relations and reputational fallout are often too devastating to recover from, even for companies that are considered to be market leaders.

While product recall insurance can’t stop contamination from happening, it is essential for companies that want to recover should they ever experience a recall. More than 78% of the companies contacted in an Ernst & Young survey had purchased product recall insurance, citing it as one of the top ways to help mitigate the financial consequences of a major product recall. 

Why are recalls so costly? Most involve some or all of the following very expensive activities:

  • Product removal, storage, and disposal 
  • Product replacement 
  • Communications and public relations (communicating information about the recall to the public and to government agencies, and ongoing PR activity to minimize brand damage)
  • Investigations into the source of the contamination 
  • Fines, legal fees, settlements, and court-ordered judgments

After the initial recall activities die down, your company may be plagued by decreased sales, reputational harm, and decreased stock value for years. But product recall insurance can help with many of the costs, allowing you to focus on saving your company and your reputation. 

Other Types of Liability Coverage for Peanut Butter Manufacturers

Product contamination isn’t the only reason that peanut manufacturers can be sued or face disastrous losses. If you cause any type of illness, injury, or property damage, either on your premises or because of your products, you can be sued and required to reimburse the injured party. 

If a non-employee or a member of the general public is injured in your plant, your CGL coverage will pay for related medical bills. It also pays for repairs or replacement if someone’s personal property is damaged on your premises. 

If you are sued, your CGL policy helps to pay for legal fees associated with the lawsuit, as well as any settlements or judgments that you are required to pay. 

You probably need a few other liability policies or endorsements to complete your peanut butter manufacturing insurance program and fully cover your unique risks. These include:

  • 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.
  • Environmental or pollution liability coverage: Protects your company from the costs associated with damage caused by improperly disposing of hazardous waste or causing environmental harm.
  • Commercial auto insurance: Covers your vehicle fleet and drivers in the event of an accident or other vehicle damage. 
  • Excess liability, or commercial umbrella insurance: Liability protection for when the limits of your CGL or commercial auto insurance policy have been reached for any single covered claim

Property Insurance for Peanut Butter Manufacturers

Commercial property insurance protects your business property from events like fire, weather, theft, vandalism, and certain other covered perils. It is essential to protect your peanut butter manufacturing facility, warehouse, office space, and all of their contents. 

You are likely to need additional property coverage to ensure that your peanut butter manufacturing business can fully recover after an unforeseen event. 

  • Business interruption coverage, or business income coverage: Pays for rent, salaries, lost income, relocation fees, and more if your business is temporarily unable to operate because of fire, wind, hail, equipment breakdown, or other covered property losses.
  • Utility interruption coverage: Pays for costs related to a breakdown in utility services, like water or electrical power, that force you to temporarily cease production.
  • Equipment breakdown coverage: Helps you pay to repair or replace damaged machines or equipment after an accidental breakdown.
  • Inland marine insurance: Protects business property as it is transported from place to place.
  • Spoilage coverage: Reimburses you for the costs of goods that spoil on-site.

Depending on where your facility is located, you may need additional flood, windstorm or earthquake coverage. Your agent can help you decide if this coverage is necessary, and can find the policies that best fit your unique needs. 

How Much Does Peanut Butter Manufacturing Insurance Cost? 

The cost to insure your peanut butter manufacturing business depends on several factors, such as the size of your business and the types of policies you need to cover your unique risks. An agent can help you determine exactly what coverage you need and the coverage limits that will best eliminate your exposures. 

In general, the cost of business insurance varies, depending on factors like the number of employees you have, the types of manufacturing equipment you use, how many vehicles and drivers you employ, and the size and location of your building.

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 peanut butter 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. 

The Lowdown on Online Quotes

Online quotes can be tempting. They are fast and easy to get—but are they accurate? And are you getting quotes for the right coverage? For business owners, choosing speed over accuracy can cost you. 

Online quotes can’t and don’t see the whole picture. They can leave out important coverage that will leave you devastated if something unexpected happens. And they can leave out cost-saving opportunities that an agent can help you take advantage of. 

Instead of getting an online quote, find an independent insurance agent now, and get one-on-one consultation and affordable options for the best coverage for your unique needs. 

TrustedChoice.com Article | Reviewed by Paul Martin

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