Hi all,
OK, so I’ve spent the last couple of days working with an insurance underwriter, and here’s the information I’ve gathered.
This is specific to California, which is often one of the more restrictive states when it comes to regulatory stuff and especially food/drug safety, so I am not sure what ramifications this has for other parts of the country. Please do your own due diligence for your own state.
Nonetheless, I thought it might be helpful to post:
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Q: If I use a co-packer, do I have to carry liability insurance or is the insurance limited to the co-packer’s manufacturing facility?
A: Since you are not doing the manufacturing yourself and instead hiring a contract manufacturer to manufacture the hot sauce for you, you or [major insurance company name] won’t have control over this third party manufacturer therefore there would be no liability insurance available for this kind of scenario.
Q: If I have a home office, is there any need to carry liability insurance?
A: With regards to you doing the sales & marketing for your hot sauce business, if you would be working from your home office, again there is no available liability insurance for this.
Q: What if I eventually move to a rented office?
A: if you were to rent a small office where you would do all your sales, marketing, accounting, paper work, etc. for the hot sauce business then you can be eligible for a business liability and property insurance. (the expected response)
Volunteered by underwriter: “But please please please make sure that your manufacturer has a very good facility and really strong manufacturing insurance for your own protection.
(sound advice)
Q: Suppose I were to rent space in a professional kitchen, one that is certified/inspected.
Like a restaurant or lodge. If I could rent such a facility 1 or 2 days a week and use it to produce sauce, I would then be the manufacturer.
Would I be able to get liability insurance for that (in CA)
A: [Major parent Insurance company] said if you’re the sole occupant of the kitchen and no one else, and no other companies will use it then we can write a policy for it.
However, [Major parent Insurance company] said in a scenario where you’re using the kitchen part time, and others use it part time, due to potential cross contamination, there is far greater liability exposure since the kitchen is actually being used by other companies any day of the week. It will be very difficult to control so again no liability insurance would be available for this scenario.
---------------------------------------------------------------------------------------------------------------------------
All Q&A here cut/pasted from emails between the underwriter and myself.
Good information I think. Hope it's of interest.
OK, so I’ve spent the last couple of days working with an insurance underwriter, and here’s the information I’ve gathered.
This is specific to California, which is often one of the more restrictive states when it comes to regulatory stuff and especially food/drug safety, so I am not sure what ramifications this has for other parts of the country. Please do your own due diligence for your own state.
Nonetheless, I thought it might be helpful to post:
----------------------------------------------------------------------------------------------------------------------------
Q: If I use a co-packer, do I have to carry liability insurance or is the insurance limited to the co-packer’s manufacturing facility?
A: Since you are not doing the manufacturing yourself and instead hiring a contract manufacturer to manufacture the hot sauce for you, you or [major insurance company name] won’t have control over this third party manufacturer therefore there would be no liability insurance available for this kind of scenario.
Q: If I have a home office, is there any need to carry liability insurance?
A: With regards to you doing the sales & marketing for your hot sauce business, if you would be working from your home office, again there is no available liability insurance for this.
Q: What if I eventually move to a rented office?
A: if you were to rent a small office where you would do all your sales, marketing, accounting, paper work, etc. for the hot sauce business then you can be eligible for a business liability and property insurance. (the expected response)
Volunteered by underwriter: “But please please please make sure that your manufacturer has a very good facility and really strong manufacturing insurance for your own protection.
(sound advice)
Q: Suppose I were to rent space in a professional kitchen, one that is certified/inspected.
Like a restaurant or lodge. If I could rent such a facility 1 or 2 days a week and use it to produce sauce, I would then be the manufacturer.
Would I be able to get liability insurance for that (in CA)
A: [Major parent Insurance company] said if you’re the sole occupant of the kitchen and no one else, and no other companies will use it then we can write a policy for it.
However, [Major parent Insurance company] said in a scenario where you’re using the kitchen part time, and others use it part time, due to potential cross contamination, there is far greater liability exposure since the kitchen is actually being used by other companies any day of the week. It will be very difficult to control so again no liability insurance would be available for this scenario.
---------------------------------------------------------------------------------------------------------------------------
All Q&A here cut/pasted from emails between the underwriter and myself.
Good information I think. Hope it's of interest.
)
