Product contamination and recall exposures are a growing source of concern among businesses and the general public. There have recently been several high-profile cases of food contamination that affected the general public.  From the salad, to the entree and dessert, every course of dinner has been impacted.

These incidents have been, in some cases, tragic. Multi-generation businesses have disappeared and people have died.

At Wilson, Washburn, & Forster Insurance we have one client going through an incident right now. We’ll call this client ABC Sausage. ABC Sausage processes, packs and distributes a variety of gourmet sausage products throughout Florida. (That is not our client’s name and they don’t make sausage, but in the interest of confidentiality it works for our purposes).

ABC’s most popular line – mild Italian sausage – was found at Publix by a random state inspection to contain listeria. Publix notified ABC who responded swiftly. Because of the way they track production and label their products, ABC knew the production run that was contaminated and to which customers it was delivered. ABC sent their own trucks out to all of their customers to pull that product.

ABC sent samples of all of their products for independent testing, shut down production as well as did a full inspection and cleaning of their facility. Fortunately, no additional traces of contaminants were found.

Publix, in an abundance of caution, went through their stores and disposed of all of ABC’s products—not just the mild Italian sausage where the state found listeria—but also the sweet and spicy Italian sausage, the applewood smoked chicken sausage, the breakfast sausage, the precooked frozen sausage, the packaged ground sausage meat, you name it!

Fortunately, in this case, the issue was caught earlier and no one was hurt.  Additionally, ABC carries a production contamination and recall insurance policy that will cover all of the exposures listed above.

ABC’s policy covers:

• The cost of the product that was disposed of, plus the lost profit (not just the product that was contaminated, but all of the product the Publix pulled from the shelves).
• The cost to withdrawal the products from the market.
• Inspection and cleanup costs at the production facility.
• Lost revenue during shut-down and clean-up.
• Public relations and marketing that may be needed to counter adverse publicity.

Product contamination policies have very broad coverage triggers. ABC’s policy would have responded even if the recall had involved a competitor’s products. In other words, if Publix had disposed of all of the sausage in their stores, that would have been a covered peril.

What would happen if your company found yourself in a similar situation? If someone gets sick eating your product, that would be covered by the standard commercial general liability policy.  The recall of the product, the product itself, lost revenues, customers’ lost profits, and the damage to your company’s reputation are all exposures that would not be covered by the general liability policy.  A product contamination and recall policy fills important coverage gaps that can help your company survive a crisis.

If you would like to talk more about your company’s exposures and the way we might be able to help you insure them, contact Phil Yanan at 786-454-8383 or pyanan@wwfins.com.