Learn how food manufacturers insurance helps food industry manufacturing businesses protect themselves against the many complex risks they face every day. Whether your business is large or small, or you make one or many products – you need the right commercial insurance program to protect you.
Food Manufacturers Insurance
Food Manufacturers Insurance. Food products manufacturers receive raw goods from butchers, dairies, farms, fishermen, orchards, slaughterhouses, or food brokers. Processing may include removing waste materials from the raw goods, cutting, blanching, or cooking, flavoring, packaging, freezing, and distributing finished goods to customers. Due to the variety of products that fall into this classification, processes and operations may include blending, baking, or deep-fat frying. Finished goods may include frozen fruit, vegetables, meats, fish, shellfish, poultry, prepared meals, and desserts.
As a food manufacturer, there are many risks you’ll face in your business. The machinery used in your business presents a high risk of injury to your employees. As a manufacturer, you rely on machinery to run your business. Many things can go wrong such as a machine breaking down or damage to equipment. Machinery breakdown can mean huge financial losses for your business. When production stops, the risk of product spoilage increases.
Fortunately, the way to counter is by protecting your business with the right insurance. This is why food manufacturers insurance is so important. Below are some of the different insurance policies you can consider for your business:
Commercial Property: this type of coverage protects the places you use for your manufacturers operation. If the contents inside the buildings are destroyed then having this insurance keeps your business covered. This type of insurance also offers business interruption coverage. If significant damage has been done to a building of operation and you have to stop your business, then this insurance will compensate you for the losses.
Commercial General Liability: Causing damage to a third person or property can be expensive to your business. If you ever cause injury to an individual or property damage to a third party, then having this insurance helps with any cost as a result.
Additional Food Manufacturing Insurance Types
Product Liability: helps with losses that occur because of injury to a user of your product or a bystander. Also, this coverage will include standard commercial general liability. To find out if this insurance is right for your business it’s best to speak with an experienced insurance agent. Doing this allows you to understand the liability exposure level of your business and what you can do to protect it.
Environmental Practices & Pollution Liability: protects your company from liability claims as a result of damage caused by waste produced by your business. Having this type of insurance keeps your business protected from waste pollution claims.
Commercial Auto: is for when you have vehicles you use for the operation of your business. When on the road there’s always the possibility of getting in an accident. With this insurance, you have more safety when on the road. If your employees use their vehicles to do transportation for your business, then you may also need to pick up hired or non-owned vehicle insurance to keep them covered.
Employment Practices Liability: protects your business from lawsuits made by an employee or former employee who claims discriminatory employment practices by your business. Having this kind of insurance in place gives you coverage against violations of any antidiscrimination regulations.
Commercial Umbrella: allows you to purchase additional liability food manufacturers insurance coverage for your business. With umbrella insurance, you can get excess liability coverage for the areas your regular insurance may have missed.
Workers’ Compensation: is probably one of the most important types of insurance coverage you need in your business. Most states require this coverage for any non-owner employees. Often, before being able to operate you must have this insurance in place. If an employee gets injured while on the job and needs medical attention, they are covered with insurance. Workers compensation insurance covers medical costs and other expenses that come as a result of being injured on the job. If the injury results in a fatality then this coverage pays benefits to the surviving family of the victim.
Product Recall: One of the biggest risks you face in the manufacturers industry is having your product recalled. There is a greater emphasis being placed on the safety of food. For this reason, you want to make sure you have the proper food manufacturers insurance protection. Having your product recalled can cost lots of money for your business. With product recall insurance you can help to reduce the cost associated with it significantly.
Food Products Manufacturing’s Perils And Risks
Property exposures are significant. Ignition sources include the cooking, refrigeration, and automated processing and conveyance equipment, electrical wiring, and heating and air conditioning systems. All machinery and equipment must be inspected and maintained regularly to avoid wear and tear or overheating losses. Wiring must be up to date and of sufficient capacity. All machinery should be grounded to prevent static buildup and discharge.
Due to its combustibility, an ammonia detection system should be in place if ammonia is used as a refrigerant. All frying operations must be carried out under hoods with suppression systems in place and automatic fuel shutoffs. A small fire or power outage of even moderate duration could result in a total loss as state, local, or federal regulations may require the disposal of major portions of stock and raw materials that have been exposed to fire, smoke, or water.
Raw stock and final products should be stored away from the processing operation. Spoilage losses can be severe if the refrigeration and cooling equipment malfunctions or loses power. Controls, such as alarms, must be in place to warn if power is out or if the temperature rises in coolers and freezers. Emergency backup systems, such as generators, should provide power if an outage or shutdown occurs. The business income exposure can be very high as some production equipment may be difficult to repair or replace quickly.
Equipment breakdown exposure is high due to the automated machinery and equipment. All machinery and equipment must be regularly inspected and maintained. If there are boilers, operational safety valves must be in place.
Crime exposure comes from employee dishonesty of both inventory and money. Background checks should be conducted on all employees. Ordering and inventory control should be carried out by two individuals so there are checks and balances. There must be a separation of duties between persons handling deposits and disbursements and handling bank statements.
Regular audits by an outside firm should be conducted. Loading docks should be supervised to minimize employee theft of finished goods. There is both an employee dishonesty and theft of money and securities concern if drivers pick up checks or accept money. Receipts should be issued for any cash payments received.
Inland marine exposure comes from accounts receivable if the manufacturer bills customers, computers (which may include computer-run processing equipment), goods in transit, and valuable papers and records. The goods must be transported in refrigerated units and kept frozen the entire time of transport in order to prevent spoilage. Delay of the trip and failure of the refrigeration units can result in loss of product. Overturn or collision will cause a total loss with no salvage due to the potential for contamination.
Trucks must be well maintained with refrigeration units checked regularly. Valuable papers and records include proprietary recipes, inventory records, customer files, quality control records, and contracts with suppliers and distributors.
Premises liability exposure is moderate as drivers of pickup and delivery vehicles, repairmen, and inspectors regularly visit the premises. There must be clear markings as to where trucks may go and their movements must be controlled to keep the area safe and secure. If tours are given or retail operations are conducted on premises, all life safety codes must be met to assure visitor safety. Good housekeeping is critical due to the potential for slips and falls.
Spills of liquids should be promptly cleaned up and warning signs posted. Exits should be clearly marked and free of obstacles. Adequate interior and exterior lighting should be available in the event of a power outage. Parking lots and sidewalks need to be in good repair with snow and ice removed.
Products exposures normally result from contamination, spoilage, and foreign objects in the finished goods. Raw milk and meat products should be tested before processing. The workplace must meet all FDA specifications for sanitary working conditions and be arranged to prevent foreign substances from entering the processing area. An on-site laboratory is recommended to verify quality control.
Controls must be in place to prevent contamination from exposure to chemicals such as insecticides and pesticides used to contain insect or rodent infestations. Stock dating and rotation are important factors. The temperatures must be monitored to ensure that all stock remains frozen to prevent the growth of bacteria. An effective recall process must be in place that can be activated immediately.
Environmental impairment exposures are from underground fuel storage, leakage of refrigerants such as ammonia and chlorofluorocarbons, and waste disposal. Storage and waste disposal must comply with all federal and state requirements. Waste should be taken from the site on a regular basis by outside contractors. If wastewater is discharged into public waterways, a permit must be obtained from the EPA. The presence of underground storage tanks usually means that a UST policy must be purchased.
Automobile exposures may be significant if the manufacturer picks up raw materials from suppliers or delivers finished goods to customers. All delivery involves refrigerated trucks and transporting of frozen goods. The radius of operation is a major concern due to the pressure to transport the cargo in a timely manner. The drivers should be experienced in operating refrigerated trucks and should have an appropriate license and acceptable MVRs. Vehicles must be well maintained with documentation kept in a central location. For long-haul deliveries, drivers may not exceed DOT standards for the number of hours worked per day and per week.
Workers compensation exposure is high due to burns caused by the cooking and processing machinery and equipment, back or hernia injuries from lifting, foreign objects in the eyes, and cuts from packaging materials. Employees may be exposed to chemicals, fungi, or excessive noise. The excessive cold may cause frostbite injuries to the extremities. All walk-in freezers must have inside escape releases.
Guards must be in place on machinery and employees should be provided with adequate safety equipment. Forklifts should be equipped with backup alarms and refueled in well-ventilated areas. Slips and falls can result if the floors and premises are not kept clean. Anhydrous ammonia refrigerants are poisonous when leaked into confined spaces such as coolers. Controls must be in place to maintain, check, and prevent such injury. The seasonality of operations may require additional training and supervision of workers as turnover may be high. Drivers may be injured in vehicle accidents or from slips and falls and lifting injuries at customers’ premises.
Food Manufacturers Insurance – The Bottom Line
We hope this article on food manufacturers insurance has been informative. Being sued can cost your company lots of money. The proper protection allows you to avoid having to pay large sums of money if you’re sued. To find the right insurance for your business, it’s best you speak with an experienced insurance broker.