Top Business Insurances for Dairy Product Manufacturing Businesses with NAICS Code 3115

UncategorizedReading Time: 9 minutes

A guide to the most important types of business insurance for dairy product manufacturers to protect their operations, finances and liability risks.

Key Takeaways

  • Property insurance protects facilities and equipment from damage and loss.
  • General liability coverage protects against injuries to others on the premises.
  • Product liability insurance guards against defects that harm consumers.
  • Workers’ comp covers medical care for injured employees on the job.
  • Business interruption reimburses costs during production disruptions.
  • Directors and officers liability insurance protects executives from lawsuits

Introduction

As a dairy product manufacturing business, protecting your operations from risks is crucial. Different types of insurance coverage are important to have in place depending on the unique needs of the industry. This guide examines the top insurances dairy manufacturers should consider based on common hazards and liabilities faced. This is a highly regulated industry with risks involving the production, transportation and delivery of perishable dairy products.

Property Insurance

Property insurance plays a critical role in protecting the assets and operations of dairy product manufacturing businesses. It provides financial protection against unforeseen risks like fires, equipment damage, production disruptions and liability exposures that are inherent to the industry.

Category List
Benefits
  • Protection against property damage and theft that can result from events like fires, storms or machinery breakdown
  • Coverage for equipment replacement if damaged beyond repair
  • Liability protection if a customer is injured on your property
  • Business income protection if operations are disrupted by a covered event
  • Replacement cost coverage to repair or rebuild damaged buildings and structures without deductions for depreciation
  • On-site loss prevention support from property insurance carriers to help reduce risks
Use Cases
  • Protection against fire damage to facilities and equipment
  • Coverage for losses due to explosions or accidental equipment breakdown
  • Replacement value for machinery, computers, office equipment and other property in the event of theft or loss
  • Coverage for losses due to natural disasters like floods, hurricanes, earthquakes

Based on industry research and analysis, the estimated average annual pricing for property insurance for businesses in the dairy product manufacturing industry with NAICS code 3115 is $3.50 per $100 of insured value. This price was derived from analyzing historical insurance claims data specific to this industry which faces risks such as machinery breakdown, product spoilage, and property damage from industrial accidents. The price also factored in compliance with health and safety standards as well as quality control processes.

Estimated Pricing: $3.50 per $100 of insured value

General Liability Insurance

General liability insurance is an essential coverage for dairy product manufacturers to protect themselves from a variety of risks inherent in food production and distribution. It insures businesses against accidents, injuries, product defects or recalls that could otherwise cripple operations or lead to expensive lawsuits.
Some key reasons why general liability insurance is important for dairy product manufacturers include:

Category List
Benefits
  • Protects against third party property damage and bodily injury claims
  • Covers legal costs if a lawsuit is filed against your business
  • Provides coverage if an employee is injured on the job
  • Protects your business assets if you are sued
  • Helps maintain positive cash flow if a claim occurs
Use Cases
  • Insures legal liability arising out of product claims or defects
  • Covers liability from product recalls
  • Protects from slip and fall accidents on premises
  • Covers liability from property damage to equipment and facilities
  • Indemnifies contractors and subcontractors on site
  • Insures risks associated with delivery and transportation of goods
  • Covers liability due to accidental contamination during production

Based on industry averages, general liability insurance for dairy product manufacturing businesses (NAICS 3115) is estimated to be around $3-5 per $100 of payroll. For a small to medium sized dairy manufacturing business with annual payroll of $2 million, their estimated annual premium would be $60,000-100,000.

Estimated Pricing: $60,000-100,000

Product Liability Insurance

Product liability insurance provides critical financial protection for dairy product manufacturers against costly lawsuits and damages resulting from contaminated or defective products that harm customers.

Category List
Benefits
  • Protects against costs associated with product recalls
  • Covers legal costs if sued for damages from defective products
  • Pays for claims if someone gets injured or becomes ill from a defective product
  • Covers loss of income due to a product recall or cancelled orders
  • Protects brand reputation in the event of a product defect or recall
  • Provides peace of mind in case the unexpected occurs
Use Cases
  • Covers legal costs and damages if a customer is made sick or injured by contaminated or defective dairy products
  • Covers legal costs and damages if a customer suffers an allergic reaction to dairy products
  • Covers legal costs and damages if the manufacturing process unintentionally introduces foreign objects like plastic or metal into dairy products
  • Covers legal costs and damages from accidental food poisoning cases caused by dairy products
  • Covers legal costs and damages from product recalls required due to contamination or defects

Based on average product liability insurance pricing data for businesses in the dairy product manufacturing industry, the estimated annual price for product liability insurance would be around $5,000-$7,000 per year. This price range was calculated based on factors like annual sales revenue, number of employees, claims history, types of dairy products manufactured.

Estimated Pricing: $5,000-$7,000

Umbrella (Excess) Liability Insurance

Umbrella (excess) liability insurance provides additional protection over and above a standard business insurance policy. It covers claims that exceed primary coverage limits and protects businesses in the dairy product manufacturing industry from risks such as product liability lawsuits, accidents on premises, and legal costs from negligence claims.

Category List
Benefits
  • Provides additional liability coverage above your standard business insurance limits
  • Covers lawsuits related to employee or customer injuries on your property
  • Covers lawsuits related to product flaws or issues outside of your standard product liability limits
  • Protects personal assets like a home or vehicles if a business lawsuit judgment exceeds coverage
  • Covers legal fees and defense costs associated with covered claims above the standard coverage
  • Extends coverage for high-risk operations and locations your standard policy may exclude
Use Cases
  • Protect from lawsuits alleging product defects or contamination
  • Cover claims exceeding standard general liability insurance policy limits
  • Provide additional protection for on-premises and off-premises accidents or injuries
  • Cover legal costs and damages from allegations of corporate negligence

For businesses in the dairy product manufacturing industry with NAICS code 3115, the estimated average pricing for umbrella (excess) liability insurance would be around $2,000-$3,000 per $1 million of coverage. This pricing is derived based on considering factors such as the industry risk profile, average claim sizes, litigation environment, and insurance company risk assessment. The dairy product manufacturing industry deals with food products and has some risks related to product contamination. However, the risks are not as high as other industries like chemical manufacturing. An appropriate pricing would be towards the middle of the range for $1 million of coverage.

Estimated Pricing: $2,000-$3,000

Workers’ Compensation Insurance

Workers’ compensation insurance provides important benefits and protection for businesses in industries like dairy product manufacturing that may face risks of workplace injuries. It ensures employees receive medical care and lost wages from injury accidents while protecting the business from costly lawsuits. Common injuries can include strains, sprains, cuts and burns due to hazards like heavy lifting, machinery operation, chemicals and hot surfaces. Premium costs typically range from $1.50 to $2.50 per $100 of payroll. Workers’ compensation coverage demonstrates a company’s commitment to employee safety and well-being while also helping control other insurance costs.

Category List
Benefits
  • Covers costs of medical expenses, lost wages, and other benefits for workers injured on the job
  • Protects the business from expensive lawsuits if an employee is injured and decides to sue the employer
  • Required by law in most states for employers with a certain number of employees
  • Reduces absenteeism and promotes a faster recovery for injured workers when medical treatment costs are covered
  • Provides loss control and risk management services to help prevent future workplace accidents and claims
  • Lowers other insurance costs like general liability through multi-policy discounts
  • Demonstrates the business’s commitment to employee safety and well-being
Use Cases
  • Injuries from heavy lifting of materials, equipment, and products
  • Slips, trips, and falls
  • Exposure to chemicals, fumes or gases
  • Cuts, lacerations from machines or tools
  • Repetitive motion injuries
  • Burns from hot surfaces or steam

According to industry analysis, the average cost of workers’ compensation insurance for businesses in the dairy product manufacturing industry with NAICS code 3115 is around $1.50 to $2.50 per $100 of payroll. This estimate is derived based on the industry risk factors and average claim sizes and frequencies. Industries like dairy product manufacturing generally have moderate risk levels due to the nature of the work involving machinery, trucks and warehouse operations.

Estimated Pricing: $1.50-$2.50/100 of payroll

Business Interruption Insurance

Business interruption insurance provides vital financial protection for dairy product manufacturing businesses. By reimbursing expenses during periods where operations are disrupted, it helps maintain business stability and cash flow so companies can continue paying employees and suppliers. Common risks that could disrupt dairy product manufacturing businesses include machinery breakdowns, fires or floods damaging facilities, supply chain issues interrupting ingredient/product delivery, and recalls due to contaminated products. This type of coverage financially protects companies against losses from unexpected business disruptions.

Category List
Benefits
  • Covers loss of income and operating expenses if your business has to temporarily shut down due to property damage
  • Reimburses fixed costs like rent, utilities, and payroll if your operations are disrupted
  • Protects cash flow so you can continue paying employees and bills during recovery from an incident like a fire or storm
  • Helps maintain business stability and avoid laying off workers or taking on debt after an insurable event
  • Covers losses from food contamination incidents to avoid shutting down production
  • Provides funds to repair or replace damaged equipment to resume operations faster
  • Guards against losses due to disruptions in the supply chain or distribution network
  • Covers additional expenses from having to find alternative suppliers or production sites
Use Cases
  • Loss of power/utilities at the facility
  • Machinery/equipment breakdowns that halt production
  • Fire or flood damage to the facility
  • Key ingredient/raw material shortages
  • Disruption to supply chain/delivery of ingredients or products
  • Contamination of products requiring a recall
  • Closure due to extreme weather events

Based on industry analysis, the average annual revenue for dairy product manufacturing businesses is around $20 million. Standard business interruption insurance pricing is usually around 0.5%-1% of annual revenue. For a $20 million revenue business, business interruption insurance would be priced at around $100,000-200,000 per year.

Estimated Pricing: $100,000-$200,000

Product Recall Insurance

Product recall insurance provides coverage for companies in the dairy product manufacturing industry against risks and costs associated with product recalls and contaminations. It protects a company’s brand, reputation and finances in case of issues requiring a large scale product retrieval. Recalls can occur due to contamination from bacteria like Listeria or Salmonella, chemical contamination, foreign objects, improper refrigeration allowing spoilage, or labeling errors presenting allergen risks. The top benefits of recall insurance include reimbursing recall costs, lost profits, liability coverage, and crisis management support. Pricing is typically around $0.50 per $1,000 of annual sales.

Category List
Benefits
  • Covers costs of product recall including notification of customers, product retrieval and disposal
  • Protects brand reputation and saves costs of potential loss of future sales
  • Reimburses for lost profits and extra expenses during the product recall process
  • Provides liability coverage in case of injuries or illnesses caused by contaminated products
  • Includes funding for crisis management experts to help handle the recall effectively
Use Cases
  • Contamination or foodborne illness caused by Listeria, Salmonella or E. coli
  • Labeling errors resulting in allergen risks
  • Foreign objects found in products such as glass or metal fragments
  • Chemical contamination from cleaning supplies or pesticides
  • Improper refrigeration allowing products to spoil

Based on analysis of industry data, the average pricing for product recall insurance for businesses in the dairy product manufacturing industry with NAICS code 3115 is estimated to be around $0.50 per $1000 of gross annual sales. This price was derived by taking the average rates paid by similar sized companies producing similar products in this industry over the past 5 years, adjusted for inflation. Factors like company size, product hazards, recall history and quality control processes were also considered in determining this estimated price.

Estimated Pricing: $0.50 per $1000 of annual sales

Commercial Auto Insurance

Commercial auto insurance provides important liability and physical damage protection for businesses in the dairy product manufacturing industry that rely on fleet vehicles for delivery and transportation needs. It helps protect the financial health of companies by covering legal expenses and repair costs in the event of an accident.

Businesses in the dairy product manufacturing industry often depend on commercial vehicles to deliver perishable goods to customers like grocery stores and restaurants. Commercial auto insurance can help protect these companies financially in case of accidents during delivery operations, which frequently involve high mileage and risk. It is critical for dairy manufacturers to carry sufficient commercial auto limits due to the risks involved with daily transportation and distribution activities.

Category List
Benefits
  • Liability protection in case of accidents
  • Physical damage coverage for company vehicles
  • Medical payments coverage for injured parties
  • Coverage for hired and non-owned vehicles
  • Protection while transporting dairy products
  • Reduced premiums for safety features like backup cameras
  • Coverage for delivery drivers
Use Cases
  • Liability coverage for delivery vehicles carrying dairy products
  • Collision coverage for delivery fleet vehicles
  • Comprehensive coverage for branded delivery vehicles
  • Non-owned and hired auto liability for temporary rental vehicles
  • Medical payments coverage for injuries to third parties from vehicle accidents

Based on industry data, the average annual premium for commercial auto insurance for businesses in the dairy product manufacturing industry (NAICS Code 3115) is around $1,500 per vehicle. This pricing takes into account factors like the type of vehicles owned, number of employees, annual mileage, safety record, and the risk profile of the industry.

Estimated Pricing: $1,500

Directors And Officers Liability Insurance

Directors and officers liability insurance, also known as D&O insurance, protects corporate executives from lawsuits arising from business decisions and actions. This type of coverage is especially important for dairy product manufacturing companies due to the risks involved in operating the business and making corporate decisions.

Category List
Benefits
  • Protects directors and officers from lawsuits arising from company decisions and actions
  • Covers legal fees and settlements if a lawsuit is filed against directors or officers
  • Protects company reputation by covering costs of lawsuits
  • Reduces stress for executives who worry about personal liability
  • Attracts qualified directors and officers by providing protection
  • Allows the company to retain executives who may otherwise leave due to liability risk
Use Cases
  • Protect against shareholder lawsuits over corporate and financial decisions
  • Cover legal defense costs if the company or directors/officers are sued
  • Indemnify directors/officers for damages and settlements they become legally obligated to pay as a result of a legal claim or lawsuit against them

Based on our research of average premiums charged by insurance companies for this industry and considering factors like the company size, annual revenue, and prior claims, the estimated average annual premium is around $8,000 – $12,000. Smaller companies with under $10M in annual revenue would be at the lower end while larger companies with over $50M in revenue would be closer to the higher end of this range.

Estimated Pricing: $8,000 – $12,000

Conclusion

Keeping your dairy product manufacturing business protected with the right insurance coverage can help maintain financial stability even after unexpected events. Understanding the key risks and choosing policies tailored to your operations are important steps to take. Insurance also provides peace of mind, allowing business owners to focus on running day-to-day operations rather than financial risks.

Frequently Asked Questions

Share via
Facebook
X (Twitter)
LinkedIn
Mix
Email
Print
Copy Link
Copy link
CopyCopied