Insurance for Food and Beverage Companies – 7 Questions to AskInsurance for food and beverage companies should be as unique as the risks these companies face. Does your insurance adequately cover your risks? Ask the following seven questions to make sure.
1. Do you have coverage for recall risks?
Recalls are a constant threat in the food and beverage industry. According to the U.S. PIRG Education Fund, there were 296 food recall announcements in the U.S. in 2024 – a decrease of 5% compared to 2023. However, there were multiple high-profile recalls, including the Boar’s Head meat and the McDonald’s Quarter Pounder recalls. Furthermore, serious illnesses resulting in hospitalization or death from contaminated food nearly doubled, with recalls due to salmonella, listeria and E. coli up by 41%.
Food recalls are often expensive due to the lost product and retrieval and disposal costs, not to mention the potential damage to a company’s reputation. Product liability insurance covers lawsuits arising from contaminated or mislabeled food, but it does not cover recall costs. For this reason, product recall insurance is an important coverage for any food and beverage company.
2. Do you have coverage for cargo theft?
Verisk CargoNet says cargo theft reached a record high in 2024, with food and beverage shipments as the most frequently-targeted type of commodity. With the risk rising, having sufficient motor truck cargo insurance is critical.
3. Do you have coverage for cyber and fraud risks?
Food manufacturers and distributors are vulnerable to cyberattacks, social engineering, and other types of fraud. A ransomware attack could shut down operations, leading to massive business interruption costs and putting food at risk of spoilage. Other attacks could target funds or even food shipments. The FBI has warned that criminals have used business email compromise tactics to divert large shipments of food. To guard against these risks, food and beverage companies need cyber and crime policies with sufficient coverage for cyberattacks as well as for social engineering scams and fraud.
4. Would you survive a nuclear verdict?
Oversized jury verdicts (often called nuclear verdicts) are on the rise. According to the U.S. Chamber of Commerce, nuclear verdicts increased in frequency between 2013 and 2022 (if you exclude the pandemic years, when many courts closed temporarily). Although any jury verdict of at least $10 million is a nuclear verdict, the median nuclear verdict during this period was more than double that: at $21 million. Product liability accounted for 23.3% of nuclear verdicts, while auto accidents accounted for 23.2%, making this a major concern for companies involved in food manufacturing and distribution. Umbrella liability insurance provides an extra layer of protection.
5. Do you have coverage for supply chain disruption?
Before food makes it to the table, it typically goes through a number of steps involving multiple companies. Something that goes wrong on the other side of the country or even the world – whether it’s a natural disaster, cyberattack, outbreak of bird flu, or something else – may impact your operations. Contingent business interruption that provides coverage for third-party disruptions will protect your bottom line.
6. Do you have coverage for equipment breakdown risks?
Food and beverage manufacturers tend to rely heavily on expensive equipment. If that equipment stops working, you’ll face costly business disruption losses on top of expensive repair or replacement costs. To prevent financial disaster, it’s important to have sufficient coverage for your equipment. Review your commercial property insurance to make sure you have adequate coverage for your equipment in the case of a fire, storm, or other covered loss. However, it’s important you understand that this will not provide protection against equipment breakdown – for that, you need equipment breakdown insurance, sometimes called boiler and machinery insurance. Also consider whether you have coverage for damage caused by cyber events.
7. Has an expert in food and beverage insurance reviewed your insurance coverage?
Each business is unique. A broker who understands the food and beverage industry can help you understand your risks to ensure you secure appropriate coverage.
Heffernan Insurance Brokers provides customized insurance for food and beverage companies, including growers, packers, manufacturers, and distributors. We will help you find the coverage you need – from motor truck cargo and warehouse legal liability insurance to pollution legal liability and product contamination and brand rehabilitation coverage. Learn more.
