Pet Food Manufacturing Insurance
(Make sure you have the right coverage)
Written by
Ann Herro has been writing about insurance and employee benefits for over 15 years. She has covered topics as easy as insuring a car, and as difficult as transparency in healthcare costs.
Reviewed by
Paul Martin is the Director of Education and Development for Myron Steves, one of the largest, most respected insurance wholesalers in the southern U.S.
Whether your pet likes his kibble to taste like chicken, fish, or lamb, in big bites or small bites, in bright colors or basic brown, making pet food involves a complex process during which a lot can go wrong.
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Dry kibble is made using a complicated manufacturing process called extrusion. This allows pet food manufacturers to create large quantities of shelf-stable pet food that includes all of the ingredients necessary for healthy dogs and cats.
First, proteins like beef, chicken, and eggs are mixed with grains, cereals, and other ingredients to create dough. The dough is fed into an expander, which uses extreme pressure and high temperatures to cook the ingredients. The cooked dough is forced out, or extruded, through die-cut holes and formed into kibble-sized pieces.
The pieces then puff up, are passed through a dryer, and are sprayed with fats, oils, vitamins, and minerals. Immediate packaging ensures that the fats and oils do not spoil.
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Why Do I Need Pet Food Manufacturing Insurance?
At any point in the pet food manufacturing process, something can go wrong that:
- Destroys your factory or equipment
- Destroys your supplies or completed products
- Causes the finished pet food to be unsafe for consumption
You need pet food manufacturing insurance to provide a financial backup, so you can protect your livelihood and continue to operate.
Product Recalls Are a Serious Threat to Pet Food Manufacturers
People love their pets. They are members of the family and trusted companions, and they are highly dependent on us to ensure their health and well-being. Most pet owners take the safety and quality of the pet food they buy as seriously as the food they buy for themselves.
Product recalls happen when a product is determined to be somehow flawed or unsafe for the public. In the case of pet food, recalls may occur due to things like contamination with a toxin or foreign objects, or mislabeling.
One of the largest product recalls ever—for any type of product—was a pet food recall.
In 2007, 14 cats and dogs died after eating pet food manufactured by Menu Foods. The food contained wheat gluten that was contaminated by melamine, an industrial chemical that can cause kidney failure.
Menu Foods recalled about 60 million cans and packages of pet food, yet even more pets were killed as the scope of the contamination continued to unfold.
The physical product recall cost Menu Foods $42 million, not including lost sales. After an initial $8 million payout to affected pet owners, the company was forced to pay an additional $24 million settlement for damages and vet bills.
What Does Pet Food Manufacturing Insurance Cover?
Pet food manufacturers need a variety of business insurance policies to protect them from numerous property and liability risks. These policies can:
- Help you pay for repairing and replacing damaged property .
- Help you cover expenses during a temporary closure .
- Help you pay defense costs and damages if you are sued.
Types of Pet Food Manufacturing Insurance
Talk to an insurance agent about which of the following types of policies you need to protect your assets.
- Commercial property insurance protects your building and other property in the event of a covered loss, such as fire, vandalism, smoke, or theft. It provides coverage for physical damage to equipment and machinery, factories, warehouses, office space, office equipment, computers, and more.
- Business interruption coverage, or business income coverage, protects your earnings and helps to pay expenses if your business is unable to operate because of damage caused by some type of covered disruption (fire, weather, etc.).
- Equipment breakdown insurance, often referred to as boiler and machinery coverage, supplements your business property insurance. It covers certain costs associated with accidental breakdown of machinery or equipment and the resulting property damage or loss.
- Commercial general liability (CGL) insurance is necessary for occasions when your business is negligent and causes bodily injury or property damage to a third party. Your CGL policy provides coverage for attorney fees, court costs, settlements, and judgments up to the limits of your policy.
- Product liability insurance covers your financial responsibility for losses or injuries to a user, buyer, or bystander caused by a defect or malfunction of your product. If you are sued because tainted food makes someone’s pet sick, you may be required to pay for veterinary costs, compensatory damages, economic damages, attorney fees, court costs, and more.
- Commercial auto insurance covers your vehicle fleet and drivers in the event of an accident or other vehicle damage. It provides coverage for property damage and bodily injury liability claims, vehicle damage, and medical bills, as well as any costs related to lawsuits due to auto accidents involving your vehicle fleet.
- Commercial umbrella insurance, or excess liability coverage, provides an extra layer of liability protection to any of several other policies you might have. It is activated when the limits of your other applicable liability policies have been exhausted, protecting you when a claim exceeds the amount of coverage available from any other applicable policy.
- Utility interruption coverage reimburses you for costs related to breakdowns in utility services (water, electrical) that force you to temporarily stop production.
- Cargo and goods-in-transit coverage, including ocean marine coverage and inland marine coverage, protects your products as they are transported from place to place.
- Spoilage coverage offers financial protection for the costs of goods that spoil on-site.
- Directors and officers (D&O) liability insurance provides protection for directors and officers of companies against legal judgments and costs arising from a variety of different business decisions.
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Product Recall Insurance Is Essential for Pet Food Manufacturers
Just as in the Menu Foods case, the costs of a product recall can haunt your pet food manufacturing business for years. In addition to immediate tangible costs for things like product removal and disposal, your reputation may never truly recover. Years of lost sales can take a toll on your stock price and everything else that you do.
You can take every precaution to ensure that your products are safe to consume, but many things are simply out of your control. In the Menu Foods case, the contaminated ingredient came from a Chinese supplier. Dogs and cats became sick and died before anyone was aware of the lurking danger.
It’s important to talk to your insurance agent about product recall insurance. It is essential coverage for pet food manufacturers.
Product recall insurance can help you get through a recall with coverage for a wide range of related costs, such as:
- Actual recall costs (product removal and disposal)
- Loss of profit
- Product replacement
- Extra expenses
- Reputation rehabilitation expenses (public relations and communications costs, etc.)
Protect Your Employees with Workers’ Compensation Insurance
Your pet food factory can be a dangerous place for your employees as they work with large machinery that uses high pressure and extreme heat. Your employees might be susceptible to cuts, crushed fingers or limbs, burns, slips and falls, and repetitive motion injuries.
What’s more, workers who are exposed to large amounts of grains and other pet food ingredients may experience both short- and long-term respiratory illnesses.
Workers’ compensation insurance provides insurance coverage when accidents and illnesses happen in the workplace, or as a result of someone’s work. It ensures that the injured worker gets medical care and income replacement if they are unable to work.
Your insurance agent can help you navigate your state’s workers’ compensation laws and requirements.
How Much Does Pet Food Manufacturing Insurance Cost?
The cost to insure your pet food factory depends on several factors, such as the size of your business and the types of policies you need to cover your unique risks. An agent can help you determine exactly what coverage you need and the right coverage limits and deductibles.
You can expect the costs of any policy to depend on factors like:
- Number of employees
- Types of manufacturing equipment
- Number and type of owned vehicles
- Size and location of your building
- Volume and geographical distribution of your products
Find and Compare Quotes
An independent agent can work with you one-on-one to determine the types and amounts of coverage you need. Your agent can get quotes from multiple insurance companies so you can evaluate the cost and coverage options and make the best choice.
Benefits of an Independent Agent
Our agents simplify the search process for finding the right pet food manufacturing insurance. They’ll walk you through some handpicked policy options and explain the details.
Most importantly, they’ll be there for you when claim time comes. They know the ins and outs of the process and will make sure your claim is handled appropriately.
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The Lowdown on Online Quotes
Online quotes can be tempting. They are fast and easy to get—but are they accurate? And are you getting quotes for the right coverage? For business owners, choosing speed over accuracy can cost you.
Online quotes can’t and don’t see the whole picture. They can leave out important coverage that will leave you devastated if something unexpected happens. And they can leave out cost-saving opportunities that an agent can help you take advantage of.
Instead of getting an online quote, find an independent agent, and get a one-on-one consultation for the best coverage for you.