Food Contamination Insurance is essential for any business handling perishable food products. Without a policy, your company could be left footing the bill for thousands of dollars in waste – not to mention the potential profits lost if your reputation drops.

It doesn’t matter if you are an award-winning chef with a chain of high-end restaurants, the owner of a mom-and-pop diner, or a full-service catering company. Without Food Contamination Coverage, your business is at risk.

How Much Does Food Contamination Insurance Cost?

Food Contamination Insurance costs vary. For a small restaurant or catering company, the cost may be $500. A large chain restaurant or grocery chain with multiple locations could spend more than $25,000 on a policy. The average cost for Food Contamination Insurance is around $1,800 annually. Always get several quotes before purchasing.

What is Food Contamination Insurance?

Food Contamination Insurance is coverage specifically designed to help a business owner recoup the costs associated with spoiled or contaminated food. When food spoils, the coverage takes into consideration changes in humidity and temperature as well as malfunctioning equipment. This coverage also pays for the replacement of buying new food and the lost income due to fewer patrons.

The food may have been stored improperly or an employee mishandled the product. A sick chef could have transmitted germs while preparing the food, or some food could have been contaminated with a bacteria such as E. coli when it arrived at your restaurant.

If your business experiences a loss due to food contamination, this insurance covers these losses and more. The policy may have limits on the maximum amount received for contamination-related issues.

A business owner can also get funds from the policy to help pay for items such as:

• Hospital tests and medicines for all affected.
• The hiring of a business firm to help restore the business’ reputation.

Before purchasing Food Contamination Insurance, it is essential to follow a few food safety tips:

• Continually inspect and service your refrigerators.
• Train employees to ensure they understand safe food-handling practices.
• Keep backup generators on hand or have off-site food storage facilities available.

For example:

You receive a call that your employees are getting sick, and you rush to the scene. You find that your food is contaminated, even though you took extra precautions to keep the products as safe as possible. Either way, it happened.

Half of your staff has food poisoning, and over the next week, customers call telling you that your restaurant gave them food poisoning, and they missed work. The clients even talk about taking legal action.

Bad reviews are written on Yelp and sales start to plummet. Without Food Contamination Insurance, this scenario could cost you hundreds of thousands of dollars. The waste, medical bills, and bad reputation could end your once thriving business.

Who Needs Food Contamination Insurance?

Any business in the foodservice industry should consider Food Contamination Insurance. This coverage is essential to protect a business against food poisoning, business shut down, negative online reviews, lost sales, and other perils.

Companies that should consider this coverage include:

• Restaurants
• Bars
• Catering companies
• Coffee shops
• Ice cream parlors

What Does Food Contamination Insurance Cover?

Food Contamination Insurance covers your business if a food-related issue arises. The coverage includes wasted food along with expenses incurred if the Board of Health closes your operation.

Expenses covered:

• Contaminated food cost replacement
• Cost of equipment sterilization
• Income lost due to shutdown
• Advertising costs to restore your company's reputation
• Medical tests and expenses

Items NOT covered:

• Food that spoiled because it was past the expiration date
• Equipment that stopped working due to old age or normal wear and tear
• May not cover equipment if there was not an approved service plan
• Will not cover equipment if the damage was not because of “direct physical damage”

Food Spoilage Insurance vs Food Contamination Insurance

Food Spoilage Insurance and Food Contamination Insurance are not the same. While they are similar, Food Spoilage will cover the costs associated with food spoiling before it is supposed to due to humidity or temperature changes, prolonged power outage, or failed machinery, such as a refrigerator. If the Food Spoilage policy also has Equipment Breakdown Coverage, the machinery might be covered. This only applies if the machinery sustained “direct physical damage,” which caused it to fail and the food to spoil. Equipment that stopped working due to old age or wear and tear is not covered.

Food Contamination Insurance covers contaminated food that could be carrying bacteria such as E. coli. This is serious because people can die of E. coli, which is not the case with a spoiled carton of milk. Contaminated and spoiled are not the same thing.

These two insurances are typically packaged and sold together. However, every insurance company does not work this way, and one of these coverages might have to be an added endorsement to the policy.

Understanding Food Contamination Insurance

Overall, Food Contamination Insurance is essential for businesses involved in the foodservice industry. If your company handles food, but you are not covering contamination, it is imperative to get in touch with your insurance agent today.