The greatest financial risk facing the food industry. Approximately 48 million people get sick, 128,000 are hospitalized, and 3,000 die of foodborne diseases each year. When this happens, all companies in the food supply chain – from farm to wholesaler to restaurant – may unexpectedly find themselves legally liable, regardless of the ultimate source of the contamination.
That is why it is important to make sure you are properly insured. It is imperative for all companies in the food service industry to protect themselves against the risk of food contamination claims. One of the best ways for companies to make sure they are adequately protected is to pay full attention to the fine print when purchasing Commercial General Liability (CGL) and commercial property insurance policies. There is specific coverage additions such as, product recall, accidental contamination, malicious product tampering, and more designed to fill any potential gaps in coverage that would make a company liable for a food borne illness claim.
Additionally, the manner in which a claim is presented to an insurer can often be the difference between a covered and uncovered claim. That is why, it is important to insure yourself with an agency that knows the difference and is on your side.
CGL coverage generally helps companies protect themselves against the risk of third-party foodborne illness claims. A typical CGL policy protects its policyholder from third-party claims involving bodily injury claims such as, sickness, disease, or death. However, almost all CGL policies contain sneaky exclusions of claims necessary for a food establish or related company.
For example, some policies issued to food companies increasingly contain “mold,” “bacteria” and/or “containment” exclusions that insurers may use to deny covered. The exclusions may be buried in the fine print. Companies should be aware of hidden policy limitations to coverage that may be used to deny or limit recovery for third-party contamination claims.
One of the most critical components of any food company’s risk management strategy should be First-Party Commercial Property Coverage. This type of coverage not only insures against losses from property damage at a food company’s site but also provides coverage for business interruption losses or supply chain disruptions. If you’re not familiar with the Honey Baked Ham’s case of 2006 click here to find out why this type of coverage is so important.
It’s also important for companies to understand that their CGL and Commercial Property Polices should only be a part of their risk management strategy. There are many options available to food service companies to make sure they are properly insured. Food service companies should work closely with their insurance agencies to make sure they are receiving the best coverage. LPL Risk Management would be happy to review any company’s current policy, evaluate their coverage, and suggest additional needed coverage at no cost. If you would like to take advantage of this free service, please give one of our agents a call today a t 631-676-7020
