Food Distributors Insurance – Cost and Types Of Policies

Whenever you budget the expenses of your business, food distributors insurance must be included in the list because you can’t always know exactly what could happen in the future.

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With the protection provided by liability insurance and all the other kinds of insurance we will tell you about, you can protect your business and yourself in case something unexpected happens.

Like any business owner, for your food distributors enterprise, you must consider how much financial danger you are taking on.

Business Insurance for food distributors

If your food distributors business runs without proper insurance, you are taking an enormous chance not just of losing some money but of a complete wipe-out.

This is because the laws in every state are very strict in enforcing liability on the owners of businesses for the results of their actions. 

In this article, we are giving very general guidelines for startup businesses to outline what the main kinds of insurance that you need are, and where we can, a rough guide to how much you can expect to pay.

The question is, can you afford to NOT have insurance for your food distributors business?

What this means, for any food distributors business owner, is that if some customer claims that your actions caused them some physical or economic damage, a court can award damages far beyond the total size of your business.

Your food distributors business is not sheltered by laws in the same way as states are, where legislation can place a “cap” on the maximum level of liability.

In some states, like Texas, there are specific monetary levels that limit the amount a court can award in any case against the state.

In a court case, it’s purely the privilege of the jury to award whatever amount they deem appropriate, even sometimes giving a person more than they have sued for.

When you are running your food distributors operations, you can’t escape responsibility for the outcomes of your actions.

Even more importantly, unless you have spent up-front the money necessary to have your business running as a limited liability company, all of that liability belongs to you as a person.

What does food distributors insurance protect you from?

For your food distributors business, the most important sorts of insurance are intended to cover the risks to your business from accidents, from unexpected events, and from mistakes.

In addition there are some official kinds of insurance that various states require.

In the next few paragraphs, we will explain the most important points any food distributors business owner should know when negotiating the insurance needed.

The main categories of insurance for your food distributors businesses are liability insurance, commercial insurance, asset insurance and workers compensation insurance.

Liability insurance

General liability insurance

Any food distributors business is dealing directly with members of the public, and that means you generally have the danger that some accident can happen to them bodily or else something of theirs can be ruined.

In such a case, they can sue you for compensation.

General liability insurance policy for your food distributors business protects you against claims coming from injury to customers or damage to their property.

It protects your food distributors business from the claims themselves and in addition to any follow-on court costs and legal fees of the lawsuits.

In many cases, it should help you to qualify for extra business from city and state organizations, where contracts insist on proper liability insurance.

The normal level of general liability insurance for your food distributors business would be with a cap of $1 million for a single submission and a total of $2 million for the whole year.

See the table in the costing section below for average prices of general liability insurance for your food distributors insurance operations.

Professional liability insurance for your food distributors business

In the event where a client alleges some negligence, errors, or omissions in how you conducted your food distributors business for them, you can quickly be involved in a court case.

Even if the case against you is decided in your favor, the cost of defense can be substantial, and the impact on your reputation can be damaging.

Every small food distributors business should have enough professional liability insurance to cover an individual claim of $25,000, with annual cover of $50,000.

See the table in the cost of food distributors insurance section below for average prices of professional liability insurance for your food distributors operations.

Product liability insurance

Whatever goods you sell or advice you give about the goods, you are running a risk that customers may claim that what they received didn’t meet your description of function, or that your guidance was basically incorrect.

You need to understand the specific laws of product liability in your own state.

For example, in California, all businesses in the supply chain can be held culpable for results caused by products claimed to be defective.

To cover yourself against any likely lawsuit, you need Product liability insurance for food distributors

Only you can know exactly how much insurance you must have.

Best advice is to consult with experienced insurance agents, brokers or company representatives for guidance.

Commercial insurance

Commercial vehicle insurance for your food distributors business

Be careful! – most policies for private vehicle insurance do not cover any occurrence like theft or accidental damage when the car is being used for business purposes.

The best way to make sure that your vehicle is insured for both its own value, and the valuable contents, is by taking out a designated commercial vehicle insurance package.

Commercial car policies cover the value of any vehicle in case of accident, malicious damage, fire, or theft.

Also, in case of any accident, the van itself, the content and any legal bills, medical expenses, and property damage is covered if your car is involved in a collision.

Most states, other than Virginia and New Hampshire, insist on this type of insurance.

The necessary value of the insurance depends on the depreciated value of the vehicle, and your intended level of cover of contents. 

Tools and Equipment insurance

Since your food distributors business needs specialized and dedicated equipment, you know how much it can cost to replace it in case of any damage, loss, or theft.

The equipment may be subject to malicious damage, deliberate fire, theft, other such unexpected acts.

In addition, acts of nature like lightning strikes, hurricanes, earthquakes, and other highly damaging natural events can destroy your whole business in one stroke.

Unless you can afford to immediately replace such specific gear quickly out of your own pocket, you must have full-level equipment insurance so that you can immediately buy any equipment needed to keep your food distributors business running.

It is hard to advise how much equipment insurance you need – it’s essentially dependent on how much you have invested in your food distributors business’ equipment.

Commercial Property insurance

Any food distributors business that owns or rents space in a building must have a commercial property insurance policy.

If you own the space, you certainly have a substantial capital investment, in addition to a big liability if there’s a mortgage.

Your physical building location should carry insurance coverage for the value of the premises and contents against natural occurrences like fire and storms, and against criminal damages like theft and vandalism.

If your food distributors business operates in areas of high risk, like Florida or Georgia, extra coverage may be needed for earthquakes and hurricanes or tornadoes.

In other states like Illinois, where extreme cold snaps can cause damage to outer coverings of food distributors business premises, there is a need for more supplementary cover than in warmer climes.

Whereas the level of cover depends mainly on the value of the property, it’s not possible to say what cover your need, but we have been able in the table in the cost of food distributors insurance section below to give some indication of the average prices per million dollars of property insurance for your food distributors business.

Temporary insurance by month, week or day for your food distributors business

Is your food distributors business working part-time or casually, or is the level of business fluctuating?

Using short-term insurance makes excellent sense. Business insurance by the month, day, or week – temporary insurance for food distributors – are special policies where you can cover a nominated period when you want to be covered.

By only paying for that period of cover, you will save by having reduced premiums but still having identical risk cover.

The important feature of short-term insurance is that you pay for the cover for a defined period – a nominated date, or a week or month starting on a specific date, for example for 30 days beginning on the specified date.

When you are expecting periods of higher business activity, get the existing cover raised.

Talk to your insurance agent, broker or the company’s representatives to see what options you have.

Business Owners Policy BOP for your food distributors business

You have the option to combine several of the important kinds of small business insurance in one policy that is known as the business owner’s policy – BOP.

A BOP combines commercial property and public liability insurance by incorporating these coverages into one insurance policy, which can save you money.

BOP insurance will protect you if any claims of injury or property damage are made.

It is mostly the right choice for small and medium-sized food distributors businesses, such as yours.

There are two limits that will rule whether BOP is suitable for your own business.

BOPs do not cover your professional liability or commercial vehicle cover.

Also, the size of your business will determine whether you are allowed to take out BOP cover.

The normal business that is eligible for a BOP policy must have no more than one hundred employees, and maximum five million dollars in annual turnover.

Plus, you must separately take out the mandated worker’s compensation, health and disability insurance as determined for your state.

Workers Compensation insurance for your food distributors business employees

In most states, it is mandatory to have workers compensation insurance when your food distributors business has one or more employees.

Workers compensation insurance covers the operation against any costs that arise if any hired hand experiences an injury or becomes sick as a result of work.

The benefits provide for medical expenses, death benefits, lost wages, and vocational rehabilitation.

Failure to meet a state’s requirements in this regard can leave you as the employer required to pay penalties levied by the states.

Some states, such as North Dakota, Ohio, Washington, West Virginia, and Wyoming only allow coverage from the government-run monopoly state funds.

In these states, you cannot take out your workers compensation obligations from private insurance providers.

Workers compensation premiums are calculated based on the employee’s pay, and usually come out at around $1.00 per $100 per month.

However, you must consult the relevant authorities in your state.

Average costs of these types of insurance

Although every food distributors insurance level is unique, there are enough examples of average quotes from insurance companies for us to give rough guidelines, including what are the cheapest rates offered.

Of course, you should always check with an agent what’s relevant for your business.

The list below is of annual premiums we have collected for the main types of insurance your food distributors businesses needs.

Types of insurance Price range
Commercial vehicle insurance $1990 – $2505
Public liability insurance $370 – $640
Equipment insurance $315 – $1375
Product liability insurance $230 – $790
General liability insurance $695 – $940
Commercial insurance $1145 – $2365

Cost of insurance for your food distributors operations depends on many different factors.

We have reckoned these figures for small independent food distributors businesses.

In larger states like California, premiums are generally about 20%-30% higher than national averages, while in smaller states like Oregon, they can be about 20%-30% less.

The location and size and type of your food distributors business can have a big effect on the cost of different policies.

You should discuss with professional insurance agents and brokers, or insurance company representatives.

Also you can let the internet do the work for you by enquiring about insurance companies near where your business is located.

Another good source of information is the local Better Business Bureau in your city.

FAQ

What is small business insurance for food distributors operations?

This is an umbrella term used to describe common insurance policies designed to protect food distributors business owners from risks like bodily injury, property damage, claims of negligence.

Does my food distributors business have to have insurance?

Some of the kinds of insurance are not mandatory for you to open your business, but they can protect you from risks in your business operations.

Several other forms are required by state law, such as workers compensation and vehicle insurance.

What does a small food distributors business insurance policy cover?

Liability insurance provides protection against lawsuits or claims filed by a customer for bodily injury, property damage, or negligence.

The specific cover will vary based on your own operations.

See the table in the costing section above for average prices of the most common policies for food distributors insurance.

How much will food distributors business insurance cost?

On top of the size of the business, some other factors, such as location and claims history, are used to determine your policy’s cost.

You should discuss with professional insurance agents and brokers, or insurance company representatives.

You can search for more information insurance for food distributors, in the search box below, and follow the relevant links.

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