Operating in the hospitality industry has its share of risks and exposures and perhaps none greater than food contamination. It’s bad business to become involved in recalls of food that may be contaminated, as it can be quite expensive to implement the requirements necessary to remedy the situation. This certainly points out the necessity for coverage for food spoilage from NorthStar Insurance Services for such expenses when such a situation arises.
Food borne illness claims are among the most detrimental financial risks facing this industry and news reports about major recalls often creates concerns and can seriously damage the reputation of companies involved. Once a contamination event has been reported, all companies in the food supply chain, from farm to market, may find themselves implicated as a possible source of the contamination. This means coming under the scrutiny of plaintiffs’ lawyers until the source of the contamination is recognized.
Only insurance can provide the needed protection
Insurance often works as a critical risk management tool, one that many companies in the hospitality industry should employ to protect against the risk of food contamination claims. However, the rise in lawsuits involving disputes over tainted food products demonstrates that owners and executives operating at food and meat supply companies should also do more to properly inspect, and protect themselves against these types of concerns.
This can certainly be accomplished by purchasing commercial general liability (CGL) and commercial property insurance policies, along with a rider that addresses food contamination, and by negotiating coverage enhancements to fill any potential gaps in your coverage.
Realize that the manner in which a claim is characterized when submitted to your insurer can often determine the difference between a covered and an uncovered claim. It’s also extremely important to understand that coverage determinations are fact specific and driven by policy language.
Therefore, as a policyholder, you should be aware of contamination and recall liabilities and should work closely with your broker providing you with NorthStar Insurance Services, along with other experienced coverage counsel to maximize your food contamination coverage in the event of a product recall that results in a loss.