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: Prepared food products manufacturing processes, packages and sells a wide variety of food products. Producing these items includes exposures from many different processes and operations, such as baking, cooking, deep-fat frying, cooling or freezing of the prepared food. Fruit, vegetable, grain, dairy, meat, or fish processing may be involved.
Property exposures come from the heating, refrigeration, and automated conveyance and processing 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. 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, heat or water. The raw material and final product should be kept separate from the processing operations to lower the potential total loss. 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 prepared 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 controls should be carried out by two individuals for check and balance purposes. Employees with authority should have background checks. If drivers pick up checks or accept money, there is both an employee dishonesty and theft of money and securities concern.
Inland marine exposure comes from goods in transit. Some goods must be transported in refrigerated units and kept frozen the entire time of transport or they will spoil. 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 any 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. If there are frozen products, temperatures must be monitored to ensure that all stock remains frozen. An effective recall program must be in place for quick activation.
Environmental impairment exposures can occur from fuel storage in underground or above-ground tanks and also from the refrigerant storage and potential leaks.
Automobile liability exposuresmay be significant if the operation picks up raw materials from farms or delivers finished goods to customers. Delivery may involve refrigerated trucks and the 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, have commercial licenses and 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. Drivers are also subject to lifting injuries if they load, unload, or stock shelves for customers. .
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.
