The Advantage of Collaborating with A Broker Who Knows the Food Industry

From its complex supply chain to the importance of high safety standards, the nature of the food industry creates unique risks.

Consider the following scenarios:

• A mix-up causes a product to be mislabeled, and as a result, allergen information is not disclosed correctly. The product needs to be recalled, which involves notifying consumers and stores, collecting and disposing of the product, and issuing refunds. The company is also facing multiple lawsuits and the risk of a class action lawsuit.
• A food manufacturing company does not receive a shipment of wheat required for production because the vendor has experienced a major natural disaster. As a result, the food manufacturer cannot make its product or fulfill its contractual obligations, resulting in significant profit loss.
• An important piece of equipment at a meat processing facility breaks down unexpectedly. As a result, production is down by 30%, and there is a risk of spoilage due to the backlog, resulting in significant profit losses.
• A truck transporting cooking oil to grocery stores is involved in a collision. The truck turns over, and the shipment spills onto the highway and into a nearby creek. In addition to the damage to the truck and the lost shipment, the company is now facing environmental cleanup costs.
• A hacker poses as a customer and succeeds in diverting a large shipment. The shipment is stolen, and the actual customer is demanding the shipment they paid for. Now the company is out the value of the shipment and needs to appease an angry customer.
• A food manufacturer sends shipments to a long-term customer, but the customer stops paying. While trying to recover payment owed, the customer suddenly declares bankruptcy and shuts down. Now the food manufacturer must absorb the cost of the shipments with no way to recover payment.

Specialized Food Industry Insurance

A standard commercial insurance policy has exclusions and restrictions that can leave food companies exposed to uncovered losses.

Do you have sufficient coverage for risks related to the following?

• Food contamination. When food is tainted with bacteria, mold, allergens or other contaminants, food companies are tasked with managing food recalls, and they may also face regulatory action and litigation. In addition to substantial direct costs, companies may also face brand damage and indirect expenses. An experienced broker can help you secure robust coverage for product liability, product recall and brand rehabilitation, as well as excess limits.
• Supply chain disruption. Food manufacturers can suffer losses when vendors fail to deliver on time, or when customers do not pay for deliveries. An experienced broker can help you obtain trade credit and contingent business interruption coverage.
• Cyberattacks and crime. Criminals sometimes use social engineering tactics to divert shipments or payments, and NPR says hackers and hijackers have been working together to steal cargo. An experienced broker can help you ensure adequate crime and cyber coverage with comprehensive social engineering protection.
• Equipment malfunction. Standard property insurance does not include coverage for equipment breakdown. For food manufacturers that rely on expensive machinery to continue essential operations, a lack of coverage can be risky. An experienced broker can help you secure equipment breakdown coverage.
• Pollution liability. General liability insurance typically excludes pollution and environmental liability claims. Although pollutants often involve things like petroleum products, toxins, and industrial materials, certain food items, grease, and food-borne contaminants could also contribute to pollution claims. An experienced broker can help you acquire pollution liability insurance.

Are you confident that your broker is knowledgeable about every aspect of food industry risk? Does your broker have access to the best markets and rates for your industry?

Heffernan Insurance Brokers offers insurance and risk management programs designed for food industry businesses, including growers, packers, manufacturers and distributors. In addition to standard commercial coverage types, such as auto, property and general liability, we can help you secure specialty food industry insurance that meets the needs of your operations.

Learn more.