• 311111 Dog and Cat Food Manufacturing
  • 311119 Other Animal Food Manufacturing
  • 311230 Breakfast Cereal Manufacturing
  • 311423 Dried and Dehydrated Food Manufacturing
  • 311612 Meat Processed from Carcasses
  • 311613 Rendering and Meat Byproduct Processing
  • 311710 Seafood Product Preparation and Packaging
  • 311824 Dry Pasta, Dough, and Flour Mixes Manufactured from Purchased Flour
  • 311911 Roasted Nuts and Peanut Butter Manufacturing
  • 311991 Perishable Prepared Food Manufacturing
  • 311919 Other Snack Food Manufacturing
  • 311941 Mayonnaise, Dressing and Other Prepared Sauce Manufacturing
  • 311999 All Other Miscellaneous Food Manufacturing

Description of operations: Prepared food products manufacturers receive raw goods from dairies, farms, orchards, fishermen, butchers, slaughterhouses, or food brokers. The manufacturer processes, packages and sells a wide variety of food products such as fruit, vegetables, meats, fish, shellfish, poultry, prepared meals, and desserts. Producing these items includes exposures from many different processes and operations, such as baking, cooking, deep-fat frying, cooling or freezing of the prepared food.

Property exposures come from the heating, refrigeration, and automated conveyance and processing equipment. All machinery and equipment must be inspected and maintained regularly to avoid wear and tear or overheating losses. Wiring must be up to date and of sufficient capacity. All machinery should be grounded to prevent static buildup and discharge. Due to its combustibility, an ammonia detection system should be in place if ammonia is used as a refrigerant. All frying operations must be carried out under hoods with suppression systems in place and automatic fuel shutoffs. Even a small fire could result in a total loss as provincial, local, or federal regulations may require the disposal of major portions of stock and raw materials that have been exposed to fire, smoke, heat or water. To reduce the potential for total loss, raw materials and final products should be stored away from the processing operations.

Spoilage losses can be severe if the refrigeration and cooling equipment malfunctions or loses power. Controls, such as alarms, must be in place to warn if power is out or if temperature rises in coolers and freezers. Emergency backup systems, such as emergency generators, should provide power if an outage or shutdown occurs. The business income exposure can be very high as some production equipment may be difficult to repair or replace quickly.

Equipment breakdown exposure is high due to the automated machinery and equipment used in prepared food operations. All machinery and equipment must be regularly inspected and maintained. If there are boilers, operational safety valves must be in place.

Crime exposure comes from employee dishonesty of both inventory and money. Background checks should be conducted on all employees. Ordering and inventory controls should be carried out by two individuals so there are checks and balances. Loading docks should be supervised to minimize employee theft of finished goods. If drivers pick up checks or accept money, there is both an employee dishonesty and theft of money and securities concern.

Inland marine exposure comes from accounts receivable, computers, goods in transit, and valuable papers and records. Some goods must be transported in refrigerated units and kept frozen the entire time of transport or they will spoil. Delay of the trip and failure of the refrigeration units can result in loss of product. Overturn or collision will cause a total loss with no salvage due to the potential for contamination. Trucks must be well maintained with any refrigeration units checked regularly. Valuable papers and records include proprietary recipes, inventory records, customer files, quality control records, and contracts with suppliers and distributors.

Occupiers’ Liability exposure is moderate as drivers of pickup and delivery vehicles, repairmen, and inspectors regularly visit the premises. There must be clear markings as to where trucks may go and their movements must be controlled to keep the area safe and secure. If tours are given, exposures increase significantly. Good housekeeping is critical due to the potential for slips and falls. Spills of liquids should be promptly cleaned and warning signs posted. Exits should be clearly marked and free of obstacles. Adequate interior and exterior lighting should be available in the event of a power outage. Parking lots and sidewalks need to be in good repair.

Products exposures normally result from contamination, spoilage, and foreign objects in the containers. Raw milk and meat products should be tested before processing. Good procedures need to be in place for sanitary working and processing conditions. The workplace must be arranged to prevent foreign substances from entering the processing area. An on-site laboratory is recommended to verify quality control. Controls must be in place to prevent contamination from exposure to chemicals (insecticides and pesticides) used to contain insect or rodent infestations. Stock dating and rotation are important factors. If there are frozen products, temperatures must be monitored to ensure that all stock remains frozen. An effective recall program must be in place for quick activation.

Environmental impairment exposures are from underground fuel storage, leakage of refrigerants such as ammonia and chlorofluorocarbons, and waste disposal. Waste should be taken from the site on a regular basis by outside contractors. If wastewater is discharged into public waterways, provincial regulations should be reviewed first. The presence of underground storage tanks usually means that a UST policy must be purchased.

Automobile liability exposures may be significant if the manufacturer picks up raw materials from farms or delivers finished goods to customers. Delivery may involve refrigerated trucks and the transporting of frozen goods. Radius of operation is a major concern due to the pressure to transport the cargo in an acceptable manner. The drivers should be experienced in operating refrigerated trucks, have commercial licences and MVRs should be checked regularly. Vehicles must be well maintained with documentation kept on file. For long-haul deliveries, drivers may not exceed DOT standards for the number of hours worked per day and per week.

Workers compensation exposure results from burns caused by the heating machinery and equipment, back or hernia injuries from lifting if manual conveyances are used, and cuts from packaging materials. The automated machinery can cause injury and loss if not properly guarded. Employees may be exposed to chemicals, fungi, or excessive noise. Adequate safety equipment should be required for employees in processing areas. Forklifts should be equipped with backup alarms and refueled in well-ventilated areas. Slips and falls can result if the floors and premises are not kept clean. Anhydrous ammonia refrigerants are poisonous when leaked into confined spaces such as coolers. Controls must be in place to maintain, check, and prevent such injury. Drivers are also subject to lifting injuries if they load, unload, or stock shelves for customers.

Minimum recommended coverage:

Building, Business Personal Property, Business Income, Equipment Breakdown, Employee Dishonesty, Accounts Receivables, Computers, Goods in Transit, Valuable Papers and Records, General Liability, Products Recall, Employee Benefits, Environmental Impairment, Umbrella, Business Auto Liability and Physical Damage, Hired and Non-owned Auto, Workers Compensation.

Other coverages to consider:

Money and Securities, Underground Storage Tank, Employment-related Practises

Source: Rough Notes, Inc.

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