Are you a food business owner looking for ways to insure your brand? Would you like to learn about food safety or food liability insurance? How about a deep dive into the role and types of food safety insurance? If the answer to these questions is yes, this blog is for you.
According to the U.S. Bureau of Labor Statistics, there were 93,800 non-fatal accidents at full-service restaurants in 2019. Unsafe food handling, slippery flooring, and burns are examples of restaurant injuries. These hazards can lead your customers to develop long-term health problems.
However, insurance can help you avoid paying upfront out-of-pocket costs for such injuries. Food safety insurance is crucial to battling legal compensation. It secures your dream of owning and operating a successful food business.
This insurance policy protects both the brand and its customers. For instance, the insurance pays for the customer’s expensive medical bills and protects your company from financial ruin. In this blog, we will learn about food liability insurance types, coverages, and more.
The Role of Food Liability Insurance
Businesses in the food industry use many types of insurance policies. Among them, the most commonly used ones include food manufacturers’ insurance and food liability or safety insurance.
The former is a specialty insurance policy that protects the food processing unit of your company. It covers industrial processes like sourcing, production, preparation, packaging, and distribution. According to Seneca, food manufacturing insurance covers spoilage, equipment failure, property damage, and consumer claims.
On the other hand, food safety insurance safeguards your business from claims for injuries. The role of this insurance policy includes the following:
#1. Legal Compliance
Legal compliance can come from regulatory jurisdictions in your area. Food businesses in some areas are legally required to own liability insurance. Failing to comply with this obligation can have repercussions like loss of license, business closure, and penalties.
#2. Customer Protection
As mentioned earlier, food safety insurance protects consumers as well. Instances like allergic reactions and food poisoning can have serious health consequences. Therefore, having a liability insurance policy demonstrates your commitment to the customer’s well-being.
#3. Saves Your Restaurant’s Reputation
Food liability insurance gives you peace of mind and protects your business’s reputation. It proves that you do not take food-related incidents lightly. Therefore, the right coverage can combat negative publicity and help you provide excellent service.
5 Types of Food Safety Insurance
Sherwin Gardner from the Science and Technology of Grocery Manufacturers of America states a few things. He suggests that restaurant owners are responsible for providing equal protection to all their customers. Moreover, they must adhere to all food safety guidelines during food production.
Managing a restaurant can be overwhelming. Anything can happen in this fast-paced industry. For instance, your chef can cut their finger with a knife, or your guests can have allergic reactions. Unfortunately, you cannot control these mishaps.
All you can do is prepare for the future consequences and learn from your mistakes. You can choose the different types of food safety insurance from this list:
- Business owner’s insurance covers customer injuries, property damages, and business interruption incidents.
- Spoilage insurance covers the costs incurred from spoiled food items and the replacement costs due to food storage failure.
- Food contamination insurance covers the settlement for food-borne illnesses and replacement costs.
- Liquor liability insurance covers the medical and legal fees arising from incidents like harming property or guests due to intoxication.
- General liability insurance covers costs incurred from spills and falls in your restaurant and damages to customer property.
Other food safety insurance policies include business interruption, worker’s compensation, dishonesty coverage, and cyber liability. In 2023, Burger King is expected to pay USD 8 million to a customer seriously injured by slipping and falling in the food joint. Similarly, a woman sued a restaurant in Los Gatos for serving extremely spicy food.
To avoid facing these situations, you must invest in food liability insurance. When purchasing such insurance policies, assess your restaurant’s risks, compare policies, and choose scalability.
Food Liability Insurance Coverage
Food liability insurance will protect your assets from unforeseen circumstances. In some cases, you can customize your food safety insurance policies. For instance, you can combine general liability with food contamination insurance policies.
Either way, the food liability policy should cover the following aspects:
- Product liability arising from unlabeled allergens or foodborne diseases
- Inventory losses from spoilage, utility malfunctions, and failures
- Negligent claims from poor advice, errors, and omissions
- Cybersecurity breaches and stolen credit card information
Check the limitations of the coverage when choosing a policy for your restaurant. According to Forbes, liability insurance for restaurants can cost USD 175 per month with a coverage amount of USD 1 million.
The Bottom Line
You are responsible for the production, distribution, and safety of your food items and premises. Hence, you must review the coverage limits, exclusions, and policy terms when choosing food safety insurance. It will uphold the safety, quality, and value of your business.
Consider factors like deductibles, claims history, and the number of employees when choosing a policy. Moreover, consider the frequency of food-related incidents and your property’s value. You must identify critical limits and monitor procedures to ensure optimal food standards.