Last Updated: May 6, 2024
We get it. Nobody likes talking about insurance.
Talking about insurance often means thinking about potential worst-case scenarios for your food business, which can cause you a lot of anxiety. Not to mention it’s an added cost you have to factor into your expenditures.
Still, insurance is a critical part of running a successful business. If you sell food in any capacity—whether that’s growing, manufacturing, or serving food—you need a liability insurance policy that will protect your finances if something goes wrong.
While there are several types of coverage that a good food business liability policy should have, one of the most important types is product liability insurance. Read on to learn more about insurance for food product businesses and how you can get covered today.
What Is Food Product Insurance?
Food product insurance is a type of liability coverage designed to protect your finances if you get hit with a third-party bodily injury claim from the use of your product.
What exactly does this mean? Let’s break it down.
As a food business, your product is the food you sell. Whether that’s produce you’ve grown, a food product you’ve manufactured, or a dish you cooked, that’s what the “product” in product liability insurance stands for.
If that food product makes someone sick or hurts them (aka third-party bodily injury) and they sue your business, product liability insurance could help cover the cost of that claim.
Learn more about what food product insurance does and doesn’t cover so you can purchase coverage with confidence.
What Risks Do Food Businesses Face?
Trying to prevent risks is an important part of running a food business, but accidents can still happen no matter how prepared you are. There are a variety of risks that food businesses face, but let’s take a look at a few examples of situations that could be covered under a food product liability policy.
Scenario 1: Foreign Object in Food
Ayesha owns a snack food manufacturing business that produces granola bars. The process of making and packaging each of the bars involves a lot of industrial machinery that Ayesha is responsible for maintaining.
She regularly conducts maintenance checks on the machines used in production to look for any parts that might be broken or in need of repairs.
However, despite these regular checks, there’s an issue with the machine that cuts each of the granola bars before they’re individually wrapped. Nobody notices it, but a tiny piece of the blade chipped off and got lodged in one of the bars.
Later on down the line, a customer shopping for groceries buys the box of granola bars with this bar in it. They open the bar, bite down, and suffer injuries to the inside of their mouth. These injuries land them in the ER and later in an oral surgeon’s office to help repair the damage done to their gums and teeth.
As a result, this customer sues Ayesha’s business, meaning she will need to hire attorneys and eventually reach a settlement with the customer that could cost her tens of thousands of dollars.
The good news is that Ayesha had food manufacturers insurance, which includes product liability coverage, so her insurer was able to help cover the cost of her legal fees.
Scenario 2: Food Poisoning
Jenny owns a food truck that sells pizza by the slice. One weekend, she books a spot at a major food truck fair where there will be a ton of foot traffic and potential new customers.
Eli is Jenny’s only employee. While she takes orders, he’s making the pizzas in the back of the truck.
While they’re parked and working at the fair, things get busier than they expected. They’re getting more customers than they’ve ever had before and it’s a bit more than they can handle. As a result, Eli leaves some sausages out on the counter for hours while he’s busy making other pizzas.
Towards the end of the day, they’re running out of sausage for the meat lover’s pizza, but Eli figures the package he left on the counter should be safe to eat after he cooks it on the pizza.
Unfortunately, some bacteria are heat-resistant, and the customers who ate slices of this pizza got food poisoning from it. One of them gets so sick they end up in the hospital and sue Jenny’s business for making them ill.
Thankfully, Jenny had product liability coverage from her food truck insurance, which was able to cover the claim so her business didn’t take a financial hit because of an honest mistake.
Scenario 3: Unlabeled Allergen
Running a home-based baking business has been Amir’s dream come true. He enjoys baking a variety of sweet treats for his customers—everything from cookies to brownies to layer cakes.
Amir prides himself on offering baked goods that cater to specific dietary needs, like gluten-free muffins and nut-free cookies. He makes sure to advertise which options are free of common allergens so that his customers can safely order from him.
Normally, Amir takes a lot of precautions to avoid cross-contamination between his baked goods, but one day he’s swamped with orders and is moving faster than normal. After packaging some peanut butter cookies for one customer, he forgets to change his gloves and briefly handles some of his nut-free chocolate chip cookies.
The customer who ordered the nut-free cookies has a severe peanut allergy and has a major reaction to the cookies after starting to eat one. To help cover the cost of medical bills and wages lost as a result of their time in the hospital, the customer sues Amir’s business.
Fortunately, Amir’s home bakery insurance included product liability coverage as part of his policy and the insurer was able to cover the cost of the claim, saving Amir the burden of having to pay out of pocket.
What Is the Cost of Food Product Liability Insurance?
Food Liability Insurance Program (FLIP) offers food product liability insurance coverage as part of our base policy starting at only $25.92 per month or $299 a year.
When you purchase a base FLIP policy, you get the following coverages:
- General Liability
- Product Liability
- Damage to Premises Rented (farmers market stalls, commercial kitchens, etc.)
You can also customize your policy and tailor it to your business’ needs with optional coverages like Tools and Equipment, Cyber Liability, and more.
When you consider that a product liability claim like the ones discussed earlier could be thousands or even hundreds of thousands of dollars if wrongful death occurs, the cost of insurance is well worth it.
Having a FLIP policy means you’ll be protected from product liability, general liability, and damage to premises rented claims, giving you the financial safety net and peace of mind you need to successfully run your food business.
Having insurance if you make a food product is the only way to protect your finances from the cost of expensive claims—and you can’t put a price tag on peace of mind. Insure your business today!
By Alex Hastings
Alex is a Marketing Copywriter at Food Liability Insurance Program (FLIP). In her free time, she enjoys reading, birding, traveling, and finding any excuse to get brunch.
