Are you planning to invest in the food industry? If you intend to deal with food products, then you have probably started thinking about commercial general liability for your business (CGL). This coverage protects your business against multiple risks, including food poisoning. However, before you buy CGL insurance, ensure you know all the factors that may limit your coverage. Here are three examples of such factors:
Most policies carry specific exclusions against some threats that may lead to food poisoning. For example, some insurers do not cover damages caused by mold or bacteria. Such an exclusion may be disadvantageous to a company whose products include cheese and bread, two foods known for their high susceptibility to mold growth. This is just an example, but there may be other exclusions that could potentially limit your coverage. Therefore, talk to your agent to understand the standard and any hidden exclusions you should know about.
As with most insurance packages, GCL carriers tend to place coverage limits on single occurrences. Most businesses who seek GCL understand this fact, for example, there may be a limit of $10,000 per occurrence. The confusion comes in the definition of a single occurrence. For example, some carriers may use the date; meaning all claims arising at the same time represents a single occurrence. Others maintain a single occurrence is that affecting one batch of products while others also consider the location for businesses operating in multiple locations.
This definition of single occurrence is important since it determines how much those suing you can recover from your insurance coverage. At the same time, it may determine how much deductible you pay since deductibles usually apply per occurrence. For example, if the number of occurrences depends on the number of affected batches, then a contamination that affects multiple batches will raise your total deductible.
If your food products get contaminated and affect customers, your obvious economic loss will stem from the recall and destruction of the affected products. However, this is not all the damage you should worry about since your existing and potential customers may stay away from your products, at least for some time. This will cost you more money in the form of declining revenue. However, your insurer may not compensate you for losses associated with damage to reputation if it isn't specifically listed on your policy or if it's excluded.
These are just three examples of issues that may limit coverage, but they clearly show that you should scrutinize the available policies before making a decision. Talk to your insurance agent to ensure the policy you are buying is the best one for the risks associated with your business. To learn more, contact an agency like Bennett Agency.