— Significant losses could be included in the event a company must recall any of its products due to a known defect or contamination of the product. These expenses may include costs for transportation, destruction, decontamination of plant sites, or storage space. In addition, costs could include notification of customers and advertising measures. Product recalls can be involuntary (required by a regulatory agency) or voluntary (the manufacturer notices a defect that is unlikely to force an involuntary recall).
— Today, most firms, including food manufacturers, have become dependent on computer networks and other forms of electronic equipment for inventory management or to store customer account and product information. This equipment is exposed to power surges, short circuits, and to general electrical disruption that can cause extensive losses. Manufacturers also face exposure to losses stemming from computer hacking and computer viruses. It is important to emphasize, too, that standard commercial property and most multi-peril or package policies contain exclusions for electrical disturbance.
The food production industry is a specialized industry with common as well as unique exposures to loss like the examples provided. Consequently, it requires specialized insurance that PAG E 2 meets those exposures. Every company in the food production industry should evaluate the potential for losses that may not be covered by a standard insurance policy.
There are many insurance companies as well as agents and brokers that specialize in providing this type of insurance, including loss prevention services. Food manufacturers should review their insurance with their agent or broker on an annual basis to ensure that they are protected against these loss exposures.