Please understand that the following is meant as a general guideline for identifying where your business may have insurance risks. It also provides suggestions on how to reduce those risks. It is not meant to determine whether a business is or is not insurable. McCaleb-Metzler can insure your business whether you do or do not fit the below description.
Description of operations: Frozen food products manufacturing processes, packages and sells frozen items such as fruit and vegetables, meats, prepared meals, and desserts. Due to the variety of products that fall into this classification, processes and operations may include baking, cooking, deep-fat frying, cooling or freezing of the prepared food.
Property exposures result from the heating, refrigeration, and automated processing and conveyance equipment. 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, Government controls and regulations -- state, local, or federal -- may require the disposal of major portions of stock and raw materials that have been exposed to fire, smoke, or water so a small fire can quickly turn into a total loss. Raw stock and final products should be stored separately from the processing operation in order to limit the exposure to fire. The business income exposure can be very high as some production equipment may be difficult to repair or replace quickly. 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 temperature rises in coolers and freezers. Emergency backup systems, such as emergency generators, should provide power if an outage or shutdown occurs.
Equipment breakdown exposure is high due to the automated machinery and equipment used in frozen food operations. 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. Ordering and inventory control should be carried out by two individuals for check and balance purposes. Employees with authority should have background checks. There is both an employee dishonesty and theft of money and securities concern if drivers pick up checks or accept money.
Inland marine exposure comes from goods in transit. 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 also cause a total loss with no salvage. Trucks must be well maintained with refrigeration units checked regularly. Valuable papers and records exposure is due to proprietary recipes, inventory records, customer files, quality control records, and contracts with suppliers and distributors.
Premises liability exposure may be significant 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. Visitor access must be limited in the processing area. However, if tours are given, exposures increase significantly. Good housekeeping is critical due to the potential for slips and falls. Spills of liquids should be promptly cleaned and warning signs posted.
Products exposures normally result from contamination, spoilage, and foreign objects in the finished products. Raw milk and meat products should be tested before processing. Good procedures need to be in place for sanitary working and processing conditions. The workplace must meet all FDA specifications and be arranged in such a way that foreign substances are prevented from entering the processing area. An on-site laboratory is recommended to verify quality control. Stock dating and rotation are important factors. The temperatures must be monitored to ensure that all stock remains frozen. An effective recall process must be in place that can be activated immediately.
Environmental impairment exposures can occur from fuel storage in underground or above-ground tanks and also from the refrigerant storage and potential leaks.
Automobile exposuresmay be significant if the operation picks up raw materials from farms or delivers finished goods to customers. All delivery involves refrigerated trucks and transporting of frozen goods. Radius of operation is a major concern due to the pressure to transport the cargo in an acceptable manner. The drivers should be experienced in operating refrigerated trucks and should have a commercial license. MVRs should be checked regularly. Vehicles must be well maintained with documentation kept on file.
Workers compensation exposure results from burns caused by the heating machinery and equipment, back and lifting injuries, or hernia, if manual conveyances are used. The automated machinery can cause injury and loss if not properly guarded. Employees may be exposed to chemicals or excessive noise. Adequate safety equipment should be required for employees in processing areas. Forklifts should be equipped with backup alarms. 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. Injuries may also occur from drivers loading and unloading the product.
Minimum recommended coverage:
Building, Business Personal Property, Business Income, Equipment Breakdown, Accounts Receivables, Computers, Valuable Papers and Records, Goods in Transit, Employee Dishonesty, General Liability, Products Recall, Employee Benefits, Environmental Impairment, Umbrella, Business Auto Liability and Physical Damage, Hired and Nonownership Auto, Workers Compensation
Other coverages to consider:
Employment Related Practices
Reprinted copyrighted material with permission by the Rough Notes Company, Inc.
