Food Distributors Insurance

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Food Distributors Insurance Policy Information

Food Distributors Insurance

Food Distributors Insurance. As a food distributor, you provide the public with invaluable services, and offering those services means that you are tasked with a lot of responsibilities.

For example, you purchase, import, and sell foodstuffs, transport the products that you offer, and of course, you have to ensure the safety of the food, as well as the individuals that you employ.

Food distributors and wholesalers receive all types of fresh, frozen, pre-packaged, and canned food items, as well as other household articles, paper goods, and cleaning supplies, from foreign or domestic farms, food processors, and manufacturers, usually by truck, for distribution to grocery stores, restaurants, concession stands, and other retail establishments.

The distribution center may be open 24 hours a day. Generally, the product is delivered to the customer on the distributor's vehicles.

While you make every effort to provide the highest level of service and go above and beyond to make sure that your operations are running as smoothly as possible, there is always a chance that something could go wrong.

As the owner and operator of an food distribution business, you are legally liable for any issues that may occur, and the cost of those problems could be exorbitant. How do you protect yourself? By making sure that you have the right type of food distributors insurance coverage.

Why is insurance important for food distributors? What type of coverage do you need? Below, you'll find the answers to these questions and more so that you can make sure that you, your employees, the people that you serve - and your business as a whole - are properly protected.

Food distributors insurance protects your distribution business from lawsuits with rates as low as $47/mo. Get a fast quote and your certificate of insurance now.

Below are some answers to commonly asked food distribution insurance questions:


How Much Does Food Distributors Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small food distributors ranges from $37 to $59 per month based on location, payroll, sales, claims history and more.

Why Do Food Distributors Need Insurance?

Fruit Ready For Distribution

As a food distributor, there are so many things that could go awry. The products that you ship could become lost, stolen, or damaged while in transit; food could spoil or be recalled; an employee could sustain a work-related injury; someone could file a lawsuit against you claiming that your products caused food poisoning; your warehouse could be damaged in an act of nature.

These are just a few examples of the things that could go wrong, and if they do, as the owner and operator of your business, you are legally responsible for the associated expenses.

While you hope that you'll never experience any issues, if you do, you could be out a hefty sum of money. For instance, replacing products that are lost in transit, legal expenses, and repair or medical bills can all be exorbitant. Having to pay those expenses out of your own pocket could put you in a serious financial crunch.

If you're properly insured, however, if any of these issues arise, instead of paying the related costs yourself, your insurance carrier will cover them for you. In other words, being insured can protect you from significant monetary losses.

In addition to the financial protection that food distributors insurance provides, being properly covered ensures that your operation is complaint with the law. In most locations, food distributors are legally required to carry certain kinds insurance coverage, and if they don't, they could face serious fines or potentially lose their business.

What Type Of Insurance Do Food Distributors Need?

The specific type of food distributors insurance coverage you'll need depends on several factors; for example, where your operation is located, the size of your business, and the specific types of products you handle, just to name a few.

Having said that, the following are examples of coverage that most food distributors will need to carry:

  • General Liability - This coverage will protect your food distribution operation from third-party premises and product liability issues. For instance, if someone were to claim that the products you provided caused a foodborne illness and filed a lawsuit against you, general liability insurance would cover the related expenses.
  • Commercial Property - If you're the buildings, products, machinery, or any other items within the physical premises of your business are damaged or lost in an act of nature, vandalism, or theft, commercial property insurance would pay for the costs that are associated with such losses.
  • Business Income - If your food distribution operation is forced to shut down as a result of a natural disaster, a fire, or another related loss, this insurance would replace the income that you would lose while you are unable to operate.
  • Business Auto. - To protect trucks, vans, or any other vehicles that are used for business-related purposes, you'll need to have commercial auto insurance.
  • Workers' Compensation - Should any of your employees sustain a work-related injury or develop a work-related illness, workers' comp will cover any medical care that they might require and replace their income if they are unable to work.


These are just a few examples of the type of coverage that food wholesalers & distributors should carry, you might need more based on your unique operations.

Food Wholesaler's & Distributor's Risks & Exposures

Cabbage Ready For Distribution

Premises liability exposure is generally limited due to the lack of public access to the storage facilities. Customers should be confined to specific areas that are kept clean, dry and free of obstacles. If customers pick up goods, loading docks must be clearly marked and user-friendly. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls.

There should be a disaster plan in place for unexpected emergencies. Contracts with transportation and storage providers may expose the operation to additional liability. Railroad sidetrack agreements pose additional concerns. If there is a railroad sidetrack or dock, an employee must verify that no one is in the path of an incoming or outgoing train. Railroad tracks and conveyors can be attractive nuisances. The premises should be enclosed by fencing with "No Trespassing" signs posted.

Products liability exposure is moderate to high because food products are particularly vulnerable to contamination and spoilage. Allergic reactions may occur if products are not properly labeled or are allowed to cross contaminate. Monitoring the quality of food received, posting lists of ingredients, and maintaining proper storage temperature can reduce this exposure.

Accurate records must be kept of products and batches to monitor for recalls. There should be controls in place to prevent contamination from chemicals used inside the facility, such as insecticides and pesticides. Stock should be regularly rotated so older, but not out of date, stock is sold first, and out of date stock is removed and discarded.

Environmental impairment exposure can be high due to the potential for air, land, or water pollution from the leakage of ammonia and other refrigerants used to keep stock fresh and fuel tanks used to service vehicles. All tanks and pipes should be routinely tested for leakage.

Spill procedures must be in place to prevent the accidental discharge of contaminants. Contracts should be in place to dispose of all environmentally dangerous chemicals. Record keeping is critical.

Workers compensation exposure is very high. Lifting injuries such as back pain, hernias, sprains and strains are common. Workers should be trained in proper lifting techniques and to use conveyances. Shelving must be stable to prevent stored goods from falling onto workers. Continual standing can result in musculoskeletal disorders of the back, legs, or feet.

Floor coverings or coatings may be slick and pose slip and fall hazards. Forklift operators must be properly trained. Leaking ammonia is a serious health hazard that can lead to lung damage or even death. Protective breathing equipment must be available to all workers in the event of any ammonia leak. Housekeeping is critical.

To avoid frostbite and hypothermia resulting from exposure to sub-zero temperatures, the length of time spent in refrigerated areas must be limited, and protective clothing required. When work is done on computers, employees are exposed to eyestrain, neck strain, and repetitive motion injuries including carpal tunnel syndrome.

Cleaning workers can develop respiratory ailments or contact dermatitis from working with chemicals. Drivers of delivery vehicles may be confronted by robbers, injured in automobile accidents, or be injured at customers' premises. Training must be provided on dealing with such situations, and any necessary security should be provided.

Property exposure is high due to multiple ignition sources, open construction, and the combustibility and damageability of the goods and their packaging materials. Ignition sources include electrical wiring and equipment, refrigeration units, heating and air conditioning systems. All wiring must be well maintained and up to code for the occupancy.

Food products are particularly vulnerable to damage by smoke, heat, fire or water and have very little salvage value. Even a small loss can cause all stock to be condemned by the FDA due to possible contamination. All goods should be palletized or shelved. Aisle space must be adequate for firefighting. The age, condition and maintenance of coolers and refrigeration equipment are important to review.

Ammonia leaks could cause an explosion. There should be detection systems, emergency shut-off valves, and exhaust systems to allow venting in the case of a leak. Ammonia pipes should run outside the building to prevent accidental collision with forklifts inside the building, and have impact barriers around them to prevent contact with vehicles. Alarms should be in place to warn of power outage or shutdown. Backup generators should be available in case of equipment failure.

Good housekeeping and fire controls are critical. Smoking should be prohibited. If there is a sprinkler system, heads must be located high enough to avoid accidental contact with forklifts. Recharging of forklifts and maintenance of vehicles should be done in a separate, ventilated area away from combustibles.

Grocery products may be a target for thieves. Appropriate security controls must be taken, including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department.

Business income and extra expense exposures are high. Recovering from a loss could require a lengthy time to rebuild the facility and purchase replacement refrigeration equipment.

Equipment breakdown exposures are high as temperatures must remain constant. All refrigeration equipment must be inspected and maintained on a regular basis. Back-up generators should be available. Additional coverage for spoilage and ammonia contamination should be considered because even a small power interruption could result in a large loss.

Inland marine exposure is from accounts receivable if the distributor offers credit to customers, computers for tracking inventory, contractors' equipment, goods in transit, and valuable papers and records for manufacturers' and customers' information. Duplicates must be kept of all data to permit easy replication in the event of a loss.

Contractors' equipment includes forklifts, cherry pickers, and hand trucks used for moving stored items. While goods may come to the warehouse via contract or common carriers or trains, goods are generally delivered to retailers on trucks owned by the distributor. Goods in transit are subject to spoilage loss from breakdown of refrigeration equipment and damage from collision or overturn.

There will be very little salvage following any transit incident due to the possibility of contamination. Because of the potential for theft, vehicles should be unmarked, have alarms, and be attended at all times. Sales representatives may carry sample stock to retailers.

Crime exposure is from employee dishonesty. Background checks, including criminal history, should be performed on all employees handling money. Warehouse operations involve a number of transactions and accounts that can be manipulated if duties are not separated. There must be a separation of duties between persons handling deposits and disbursements and reconciling bank statements.

Regular audits, both internal and external, are important in order to prevent employee theft of accounts. Good security systems should be in place to discourage employee theft. Physical inventories should be conducted at least annually.

Commercial auto exposure is moderate for the salespersons' fleet and delivery vehicles. There should be written policies on personal and permissive use of any vehicles furnished to employees. All drivers must be well trained and have valid licenses for the type of vehicle being driven.

MVRs must be run on a regular basis. Random drug and alcohol testing should be conducted. Vehicles must be well maintained, including refrigeration systems, with records kept in a central location.

Commercial Insurance And Business Industry Classification

  • SIC CODE: 5141 Groceries, General Line
  • NAICS CODE: 424410 General Line Grocery Merchant Wholesalers
  • Suggested ISO General Liability Code(s): 13670
  • Suggested Workers Compensation Code(s): 8018

Description for 5141: Groceries, General Line

Division F: Wholesale Trade | Major Group 51: Wholesale Trade-non-durable Goods | Industry Group 514: Groceries And Related Products

5141 Groceries, General Line: Establishments primarily engaged in the wholesale distribution of a general line of groceries. Establishments primarily engaged in roasting coffee, blending tea, or grinding and packaging spices are classified in Manufacturing, Major Group 20.

  • Food brokers, general line-wholesale
  • Groceries, general line-wholesale

Food Distributors Insurance - The Bottom Line

To find out more about the specific types of food distributors insurance policies you'll need and how much coverage you should carry, consult with a reputable broker that is experienced in commercial insurance.

Types Of Small Business Insurance - Requirements & Regulations

Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.

Operating a business is challenging enough without having to worry about suffering a significant financial loss due to unforeseen and unplanned circumstances. Small business insurance can protect your company from some of the more common losses experienced by business owners, such as property damage, business interruption, theft, liability, and employee injury.

Purchasing the appropriate commercial insurance coverage can make the difference between going out of business after a loss or recovering with minimal business interruption and financial impairment to your company's operations.

Small Business Information

Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.

Small Business Insurance Information

In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.

The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.

Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.

According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.

Types Of Small Business Insurance

Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:

  • What type of business am I running?
  • What are common risks associated with this industry?
  • Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
  • Does my state require me to carry this type of insurance?
  • Does my lender or do any of my investors require me to carry this type of policy?

A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:

Business Insurance Policy Type What Is Covered?
General Liability InsuranceWhat is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.
Workers Compensation InsuranceWhat is covered under workers compensation insurance? This type of insurance protects a business and its owner(s) from claims by employees who suffer a work-related injury, illness or disease. Workers comp typically provides the injured employee with benefits to cover medical expenses, a portion of his/her lost wages, rehabilitation costs if applicable, and permanent partial or permanent total disability.
Product Liability InsuranceWhat is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.
Commercial Property InsuranceWhat is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.
Business Owners Policy (BOP)What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.
Commercial Auto InsuranceWhat is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.
Commercial Umbrella PoliciesWhat is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.
Liquor Liability InsuranceWhat is covered under liquor liability insurance? It covers bodily injury or property damage caused by an intoxicated person who was served liquor by the policy holder.
Professional Liability (Errors & Omissions)What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.
Surety BondWhat is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).


Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.

Business Insurance Required by Law
Small Business Commercial Insurance

If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.

Your insurance agent can help you check applicable state laws so you can bring your business into compliance.

Other Types Of Small Business Insurance

There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:

  • Business Interruption Insurance
  • Commercial Flood Insurance
  • Contractor's Insurance
  • Cyber Liability
  • Data Breach
  • Directors and Officers
  • Employment Practices Liability
  • Environmental or Pollution Liability
  • Management Liability
  • Sexual Misconduct Liability

Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.

Also learn about small business insurance requirements for general liability, business property, commercial auto & workers compensation including small business commercial insurance costs. Call us (855) 767-7828.

Additional Resources For Manufacturing & Wholesaler Insurance

Read informative articles on small business manufacturing and wholesale insurance. Manufacturing and wholesale companies face many risks due to the nature of their business operations.


Manufacturing And Wholesale Insurance

For manufacturers and wholesalers, having the proper coverage is very important. You will need Products/Completed Operations Liability Coverage to protect you against injuries or property damage cause my the products you make or sell.

Manufacturing is an extremely broad category that includes countless potential hazards and exposures in virtually all coverage areas. Because of this, every individual manufacturer is unique and a specific risk survey of every operation is advisable.

The basic insurance needs for every class of business or operation includes property coverage for buildings, machinery and equipment, as well as for raw stock and finished products. Liability insurance for premises exposures is important but products liability insurance presents greater concerns so these exposures and coverage needs must be evaluated carefully.

In addition, protection for injuries to workers, environmental coverages and automobile insurance are priority items.

Wholesale and distribution operations have many of the same physical damage and property coverage concerns as warehouse operations. In both, the value of both real property and stocks of merchandise is very high. Loss control and other techniques appropriate to the types of merchandise involved are needed. For these reasons, adequate and appropriate property insurance coverages are important.

The commercial auto exposure can also be significant, based on the extent of merchandise delivery. In addition, transportation or motor truck cargo insurance on the merchandise must also be arranged.

Employee theft is always an issue and can be a significant exposure, depending on the type of property involved. Finally, the types of merchandise and material handled makes workers compensation insurance another very important coverage.

What does the insured does that could result in a covered loss? The insuring agreement only requires that the insured be legally obligated to pay damages for injury to others or damage to their property included within the products-completed operations hazard covered by the insurance.

Because of this, every product manufactured and completed operation exposure for each named insured must be determined, described and evaluated to be certain that each represents acceptable exposures, or are acceptable classes of business to the insurance company providing coverage.

Once the extent of all business activities and operations is determined, the process of identifying hazards begins. The first step in the process is completely listing and describing all current products being manufactured and projects being worked on.

The next step is obtaining the same information for discontinued products and completed projects for the past five to 10 years, depending on the products or projects involved. This should include an explanation of why the products were discontinued. If some completed projects were of a different type than those currently being worked on, an explanation is in order, including whether the insured may resume them in the future.

Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income with Extra Expense, Equipment Breakdown, Employee Dishonesty, Accounts Receivable, Bailees Customers, Computers, Goods in Transit, Valuable Papers and Records, General Liability, Employee Benefits Liability, Environmental Impairment Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.

Other commercial insurance policies to consider: Earthquake, Flood, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.


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