I'm Worried Someone Might Get Sick, Bankrupt My Business, and Ruin My Life

If this kind of worry keeps you up at night or manifests daily as a knot in your gut, here's what to do:

Get a business insurance policy.

A food-specific insurance policy. A really GOOD, food-specific insurance policy. In short:  GO TO INSURANCE. Go directly to the food business insurance. Do not pass Go. Do not collect $200.

Here's why:  Someone getting sick from your food product is the easiest way to go directly out of business and into bankruptcy. It's the biggest vulnerability most food startups face. And in our legal system, the way to solve that illness (or death), is usually money. That money should come from insurance, if at all possible. It should not come from your business's bankruptcy, from the forced sale of your family's house, from your personal savings, or anywhere else (again, if possible, and if you didn't do anything you really shouldn't have that ended up making someone sick).

Practical Tips For Getting The Most Out Of Your Food Insurance

Here are some practical tips to help get the best food business insurance you can (and what to do if you already have a policy):

  1. Look for an insurance company/agent that has experience working with food startups, or at least with food businesses in general. All business insurance is not created equal. You don't want the same insurance that I have for my law practice, or that your graphic designer pal has for her freelance business. Food is fun, but when people are eating instead of reading your product, you have to be seriously careful. An insurance agent that knows where the liabilities lurk for food businesses can help write a policy tailored to protect your business. You don't want an off-the-shelf product. Ask other food entrepreneurs who they have used.
  2. Insurance is only as good as the policy language. Insurance is just a contract for someone to pay for certain things on your behalf, in certain situations. The words of the policy matter. Sit down and read the policy. Write down any questions you have, and talk them over with your insurance agent (and/or lawyer). You might be surprised to see what is and is not included in your policy.
  3. Try to match your policy with your on-the-ground operations. For example, restaurants might only need insurance for issues that happen on their physical premises. But a meal delivery service might need insurance for drop-off locations (houses, apartment complexes), pick-up locations (CrossFit gyms, other businesses), or for delivery drivers out in the world. There is rarely a "standard" or "one-size-fits" all policy, especially when it comes to food startups. 
  4. When your business grows, it changes. Scaling up a food startup generally means changing your operation. You might move from a commercial kitchen to a co-packer. From the farmer's market to Whole Foods. The point is, when your operations change, your insurance policy should be updated to match your new scale. More food = more potential food liability. You'll probably forget or back-burner this item when you are scaling up, because scaling up usually means more work for you (at least in the short term). So, stop reading right now and schedule a calendar reminder to yourself every six months or every quarter to at least think about whether you need a policy update.

At the end of the day, you can't anticipate every problem and you can't predict the future. But you can take smart, practical steps to protect your business and sleep better at night. In the words of the great Tony Horton, do your best and forget the rest.

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