As processors take measure of their own impacts of Hurricane Ida, which ravaged the Louisiana coastline, we’re reminded of the power of nature and, of course, our own fragility. Added to the upheaval we’ve experienced over the last 16 months, it’s also a reminder of impending disaster and the need to be prepared for the next one.

I’m sure that major companies with considerable assets in or near Ida’s path, such as Sanderson Farms, have relatively iron-clad insurance policies to help them cover damages and recover quickly from the disruptions of such events. But the same can’t be said of many smaller companies with far less financial wherewithal.

Ida, of course, is only the latest example of a disaster; to be sure, they’re not all hurricanes, and they’re not all confined to the Gulf Coast. It takes me back to a recent visit I had with Nicholas Meat, a small beef packer in Loganton, Pa., for a story that will appear in our October print issue. It’s a company now growing and adding all the technological bells and whistles to its second packing plant. The first was destroyed by fire in 2005.

That story focuses more on Nicholas’s present and future than its past, and so I’m leaving out the insurance-related aspects. Bummer, I can’t find room for the hilarious hazing the company’s worn, steel toe boot-wearing managers gave their polished insurance representative for daring to wear a shiny pair of Cole Haans on his visit that day in early August.

They can all have a laugh now, but back when the fire occurred, Nicholas Meat had the heart-sinking realization of just how unprotected they were. In fact, they were 200% to 300% underinsured, with a horrible policy that only covered a slight percentage of damage once it even kicked in. The whole matter went to litigation, adding weight to the heavy financial toll that could have ended the family business.

Many will recall also the cautionary tale of Edwards & Sons, the Surrey, Va.-based specialty ham processor whose plant and millions of dollars’ worth of product were destroyed by fire in January of 2016. Edwards (which has since sold) became mired in a legal battle with its insurer, saying they “way underinsured” the company for replacement costs.

In a May 2021 interview, Sam Edwards III told us his advice to processors would be “to sit down with your insurance company and really have a heart-to-heart talk to them about risk assessment, and determine who from their company is going to be doing the statement of values for replacement costs of your building and equipment. And don’t just gloss over that … make sure you’ve got enough coverage for that, and make sure your insurance company is aware of their responsibilities to make sure you’re covered.”

Starting from scratch has its advantages, such as laying out a new plant just how you want it to maximize efficiency. But it sure takes a long time, a lot of money (especially with today’s construction costs) and a hell of a lot of stress to realize the benefits — if rebuilding is even an option. For many businesses, it’s not.

The Nicholas and Edwards fires didn’t make international news. They weren’t disasters of the same physical scope as a Hurricane Ida. But there is no way to measure the magnitude of the devastation the families must have felt when their personal worlds came crashing down.

Whether you’re a multi-billion-dollar company or a mom-and-pop shop by comparison, stay up on your insurance, know your policy, know your policy provider, and make sure you have the coverage you need for the next crisis.

As Edwards told us, “[E]verybody should have a plan of action for anything that’s catastrophic that may happen to their company.”

Rest insured

Join for free* to continue reading.