Snack Food Manufacturing

Get the Snack Food Manufacturing Insurance You Need to Protect Your Assets

Ann Herro | September 5, 2018
Women working together making pretzels

The US snack food manufacturing industry includes about 650 establishments with combined annual revenue of about $38 billion. The snack food market is expected to exceed $600 billion in revenue by 2020. 

Snack food manufacturers are primarily engaged in:

  • Salting, roasting, drying, cooking, or canning nuts
  • Processing grains or seeds into snacks
  • Manufacturing peanut butter
  • Manufacturing potato chips, corn chips, popped popcorn, pretzels, pork rinds, and similar snacks 

Why Do I Need Snack Food Manufacturing Insurance?

Whether you produce potato chips, corn ships, popcorn, or pretzels, snack food manufacturers face a variety of complex and potentially devastating risks. 

  • Events like fires, tornadoes, thefts, or vandalism can damage or destroy buildings and equipment. 
  • Customers and employees can be injured at your facility or as a result of consuming your products. 
  • Spoilage, supply shortages, equipment breakdowns, and product recalls can destroy your ability to operate, earn revenue, and meet ongoing obligations. 

But with snack food manufacturing insurance, you’ll gain the peace of mind you need. A comprehensive set of tailored business insurance policies will help you: 

  • Protect your physical assets, your customers, and your employees. 
  • Protect your financial assets when you are sued for causing harm to a third party.
  • Recover from product spoilage, contamination, and recalls.

Basic Coverage for Property and Liability Claims

Snack food manufacturing insurance begins with a few common property and liability insurance policies designed to cover your business risks. 

  • Commercial general liability (CGL) insurance is necessary when you are accused of causing bodily injury or property damage to a third party. It covers medical expenses and repair costs for the injured party, as well as attorney fees, court costs, settlements, and judgments up to the limits of your policy.
  • Commercial property insurance protects your buildings and other property in the event of a covered loss, such as fire, vandalism, smoke, or theft. It provides coverage for physical damage to food processing equipment, factory buildings, warehouses, office space, office equipment, computers, and more.
  • Business interruption coverage protects your earnings and helps to pay expenses if your business is unable to operate because of damage caused by some type of covered disruption (fire, weather, etc.).
  • Equipment breakdown insurance covers certain costs associated with accidental breakdown (power surges, operator error, etc.) of machinery or equipment. 
  • Inland marine coverage protects cargo as it is transported from place to place.

Spoilage, Contamination, and Recalls Are Costly Problems

Snack foods may not be top-of-mind when you think of food contamination and spoilage. But with a wide variety of ingredients coming from numerous suppliers to be processed in your facility, anything can happen. 

Spoilage is a major concern for any food manufacturer. Power outages and other issues beyond your control can damage refrigeration equipment or create other conditions in which spoilage occurs. Spoiled product must be destroyed, resulting in a variety of unexpected costs and lost income. 

Food contamination can be an even bigger problem. Contaminated food products must be promptly removed from the market and destroyed. Retailers, consumers, and government bodies must be notified. Your reputation may be permanently harmed. Depending on the size and seriousness of the recall, the costs can be devastating. 

How Can Snack Foods Be Contaminated? 

Foods can become contaminated in a variety of ways. Undeclared allergens (mislabeling) were the top reason for food recalls in 2017, and are the top source of contamination for snack foods. 

If shared production lines are not properly sanitized between runs, or if ingredient separation protocols are not followed, an ingredient like milk or nuts can sneak into a product that is supposed to be free of allergens. 

  • In May 2018, Utz Quality Foods recalled several brands of tortilla chips due to potential contamination from an undeclared milk allergen.

Snack foods can also be tainted by biological contaminants. This can happen when toxins or microorganisms contaminate your product through tainted water used in the manufacturing process, poor worker hygiene or unsanitary food handling, or pest infestations.

  • In 2012, Dale and Thomas Popcorn recalled 14 varieties of its popcorn over possible Listeria contamination.

Spoilage Coverage and Product Recall Insurance

Thankfully there are insurance products that can help you recover from both spoilage incidents and product recalls. 

  • Spoilage coverage offers financial protection for the costs of goods that spoil on-site. An insurance agent can help you decide how much coverage you need and the types of situations that need to be covered. 

If one of your snack foods is recalled, the costs can be even more disastrous. Product recall costs can include:

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

After the immediate crisis subsides, the costs of a food recall can continue to haunt your business for years in the form of decreased sales, reputational and brand harm, and decreased stock value.

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

How Much Does Snack Food Manufacturing Insurance Cost? 

The cost of snack food 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 snack food 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 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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