The produce industry has really stepped up its game in the food safety arena to protect public health.
But when it comes to protecting their own financial well-being related to product recalls and foodborne illness liability, some solutions are needed regarding what’s currently available for recall insurance.
A comprehensive and cost-effective coverage solution that makes sense for the insured as well as the insurer has proved difficult to craft, and recall insurance that is currently available has some shortcomings, due largely to the complicated nature of what must be covered:
- Some policies require a recall to be mandatory, but federal regulators’ recalls are voluntary.
- Tracking the ultimate source of contamination can be a lengthy process that can for a time incorrectly link a product or company to the event. From the field where product is grown, to the packinghouse, truck, repacker, processor, retailer — there are multiple possible points of contamination and liability.
- They fail to take into account collateral damage. Policies cover the cost of bringing product back from the market, and loss of income. But they specify the only way a policy holder can be compensated is if it’s their own product that causes illness or injury — for example, if ABC Tomato Co. recalls its product but the source of the outbreak is eventually traced to XYZ Tomatoes Inc.
Funding for a feasibility study of recall insurance in the Senate farm bill is a welcome step, and the House would be wise to preserve that provision as it begins work on its version.