Business insurance for food businesses: All you need to know

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    Chris Godfrey

    Page written by Chris Godfrey. Last reviewed on June 25, 2024. Next review due October 1, 2025.

    No matter what happens, people have to eat. Across the US there are thousands of businesses making, preparing, and selling food and drinks to millions of hungry and thirsty customers. The products these businesses sell may vary considerably, but they all have one thing in common – they’re at risk if anything goes wrong with the food or services they provide. To avoid potentially catastrophic compensation claims, costly repairs, or mounting legal bills, food and drinks businesses turn to food insurance to protect them if the worst should ever happen.

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      Why is professional food insurance important?

      No matter if you operate a restaurant, a food truck, a takeaway delivery service, or you manufacture foods for commercial or consumer markets, you need professional food insurance.

      Despite your best intentions and quality and safety due diligence, there is always the possibility that things can go wrong. A simple food poisoning claim, fire or flooding at your premises, or even a malicious social media post has the potential to leave you facing enormous compensation claims, expensive repairs, or massive legal costs that could ruin your business. Consider these examples of common but still devastating events:

      • Food poisoning – your food truck sells unusual and delicious wraps and salads. Unfortunately, without your knowing, a batch of shellfish carries its own dangerous, exotic extras. The bacteria causes a customer to be violently ill, ending up in hospital. They sue you for neglect, causing harm, and their medical and legal costs. Public liability insurance will take care of the financial impact and the legal worries. It may also give you support if the claim sparks an unwarranted inspection, and you cannot operate while it’s ongoing. 
      • Fire in the kitchen – a new employee overfills a deep fat fryer and it goes up in flames, taking your kitchen with it. Your general business and contents insurance will cover the cost of repairs, while business interruption insurance will provide emergency income during your temporary closure.
      • Plastic in your food – your business manufactures luxury energy bars and snacks. A small piece of plastic packing accidentally ends up in the production mix and eventually, in a consumer’s mouth. Their claim for compensation can be neatly handled by your product liability insurance while back at the factory you make changes to your product processing. 

      These are just a few of the things that can go wrong in any food business. Fortunately, in every case food insurance has turned potential disaster into a mild event. But think again. If any of these incidents happened to your food business and you did not have insurance, could your operation survive?

      What types of insurance for food businesses are there?

      Food insurance is an umbrella term for a range of business insurance policies that can protect food businesses from the impact of almost any unwanted event. Essential food insurance includes:

      Public liability insurance

      Public liability insurance protects you if someone is injured, or their property is damaged because of the products or services that you or your business provides. This type of cover, also known as PL or Liability Insurance, is designed to protect your business against third party claims for injuries or property damage from a customer or client, passer-by, or a visitor to your business premises – whether you’re at fault or not.

      Product liability insurance

      Product liability insurance (PLI) – also known as ‘product insurance’ – is designed to protect companies, partnerships, sole traders and the self-employed from financial loss in the event that someone is harmed, or property is damaged due to the products that they supply. 

      Important tip: Product liability insurance for food businesses isn’t only for manufacturers, farmers or chefs. In the event of an accident, your food business could be held liable even if you only distributed the product and had nothing to do with its creation.

      Business interruption insurance

      Business interruption insurance covers you for lost income if your business is unable to operate due to an unexpected event. This would include incidents such as:

      • Fire and flooding at your premises
      • Power black outs 
      • Major equipment failure 
      • Supply chain issues beyond your control
      • And more

      What does food liability insurance cover?

      Food liability insurance can protect your food business from the financial impact of accidents, errors and omissions with the products and services you provide. This includes:

      • Personal injury to third parties caused by your food or drinks business – for example, a customer is made ill because you failed to correctly list the allergens in the food you sell
      • Property damage to third parties caused by your food or drinks business – for example, a forklift at your food production centre drops heavy crates of canned goods onto a visitor’s car
      • Accidental injury or damage caused by your employees – for example, one of your waiters spills red wine onto a customer’s expensive suit.

      How much does insurance for selling food cost?

      Insurance for food manufacturers or retailers can cost as little as $35 per month. However, the premium you pay will depend on a range of unique factors, such as the type of business you run, the scale of your business, where you are located, and the types of products you sell. 

      How Swoop can help

      All business involves risk, but that doesn’t mean you have to suffer the consequences if things go wrong. Don’t let one bad ingredient or a simple accident cook your business for good. Contact Swoop today to compare top-quality food insurance from different providers and to discuss all your business insurance needs. 

      Written by

      Chris Godfrey

      Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Wells Fargo Bank, Visa, Experian, Ebay, Flywire, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of US consumer and business finance.

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