Safeguard your food business with food liability insurance. Whether you work with fresh produce, meat or baked goods, food liability insurance can help protect you from the unique risks you face as a member of the food industry.
What is food liability insurance?
Food liability insurance aims to protect food businesses from the many risks and challenges that come with manufacturing, processing and/or selling food and food products. This type of insurance can be useful no matter which part of the supply chain your business is involved in – raw goods, processing, packaging, or distribution. With the right food liability insurance policy, your food business can be protected from a wide range of risks, like product recall due to contamination or mould, negative publicity, and lost or damaged items.
What is types of insurance should a food based business consider?
Coverage varies between policies, but you can generally expect the following commonly purchased policies to protect you from the risks that come with your food business:
- Commercial general liability insurance: Commercial general liability insurance, sometimes referred to as “slip-and-fall insurance,” protects against the day-to-day risks that come with owning a food based business. For example, if a customer slips and falls on a wet floor at your facility, they could sue you. In such an instance, your insurer might help pay for medical bills, along with legal defence fees, settlement fees, and more. Similarly, if a customer got sick, was injured or had an allergic reaction from your products the product liability extension include in most commercial general liability policies would help pay for related legal, settlement or judgement expenses. Another example is if a competitor claims you slandered them in an advertisement and sues you. In this scenario, your insurance company might cover any relevant legal costs. Overall, commercial general liability coverage may cover the cost of medical expenses, repair bills, legal fees, etc. for claims related to third party injury, property damage, product liability, libel or slander, and more.
- Product recalls: The food and beverage industry is especially susceptible to mould or contamination. Luckily, food liability insurance can protect against these risks and the subsequent costs associated with product recalls. Product recall policies formally and informally also can protect your company’s reputation as extensions to help with managing PR, post incident marketing etc are typically included. This is an important risk to manage because if rumours about your business are spreading (for example, if contaminated products were not recalled before they reached the shelves and were consumed by customers), you may lose business. Negative publicity coverage extensions can also help you recoup some of the costs when bad publicity leads to a loss of income.
- Commercial property insurance: Protect the physical structure of any location you own, rent or lease and any business-related contents from unforeseen circumstances like theft, vandalism, fire, water damage, etc with commercial property insurance. When you add commercial property coverage to your insurance policy, your insurance provider may pay for repairs or replacements in the event of loss or damage caused by an insured peril.
- Cyber liability insurance: If your organization stores confidential information online about it’s customers, then cyber liability insurance is important. With cyber liability coverage, if a hacker breaches your system and steals important data, your insurance provider may help cover the associated costs, which could include credit monitoring, legal fees, crisis control, patient notification, and more.
- Business interruption insurance: Business interruption insurance can protect your food business from lost income if it is forced to close due to an insured peril. Insured perils covered by business interruption insurance vary but can include theft, fire, vandalism, windstorms, water damage, and more.
- Equipment breakdown insurance: If a piece of equipment, such as an HVAC unit, suffers an internal failure (e.g. a mechanical or electrical breakdown), equipment breakdown insurance could help cover the cost of repairing or replacing it. Even better, business income lost as a result of the equipment breakdown may also be covered by the insurance company. This is particularly important for food based companies due to the risk of spoilage and the requirements to maintain certain products at specific temperatures.
- Commercial auto insurance: If your food business uses vehicles for business purposes, such as deliveries, picking up supplies/materials etc., you may benefit from commercial auto insurance coverage. Policies vary but may include third party liability coverage, uninsured automobile coverage, accident benefits coverage, etc.
- Crime insurance: Crime insurance can help mitigate the financial losses of employees or customer crimes related to the operations of your food business, such as employee dishonesty, fraud, burglary, robbery, theft, etc.
- Umbrella liability insurance: Umbrella liability insurance takes effect when regular liability limits are reached, meaning it can protect your food business against unforeseen or catastrophic events.
- Cargo: Transporting food items is an important part of many food and beverage businesses. But a lot can go wrong in transit. Food liability insurance policies often feature motor truck cargo coverage, protecting your items in the event they are lost or damaged in transport.
Who needs food liability insurance?
Any business involved in the manufacturing, processing and/or selling of food should purchase food liability insurance and a number of the other important insurance policies for food based businesses outlined above. Althought people typically think of large, well know brands and companies when it comes to food it’s also important to remember that food businesses also may include vendors and concession stands, caterers, restaurants, personal chefs, farmers’ markets, food carts, food trucks and trailers, niche manufacturers, and more.
Does food liability insurance cover services?
Yes, depending on the policy you choose, your food liability insurance may also cover services. For example, if your catering business is in the middle of an event and a piece of equipment causes a fire, resulting in bodily injury or property damage, your insurance provider may help cover the costs. If you want your food liability insurance policy to cover services, make sure to choose a policy with this coverage.
What is not covered by food liability insurance?
Most food liability insurance policies will not include the following coverage types, but all of these coverages can be purchased as part of a package or on a standalone basis:
- Commercial vehicle insurance
- Utility and spoilage insurance
- Equipment breakdown insurance
- Cyber insurance
- Workers’ compensation insurance