Understanding Your Food Recall Insurance Policy

Melons and sprouts—need one say more to gain the immediate attention of a food company? The food industry is in the midst of a wave of foodborne illness claims, and this wave has not yet crested. The Food Safety Modernization Act has granted the...


In conclusion, any risk manager in the food industry must consider the utility of food recall policies as a risk management tool. The analysis will require the weighing of the cost of the policies versus the scope of coverage. Economic loss from a food recall is usually substantial. However, only a minority of food recalls are because of actual or “likely” bodily injury.

Food insurance policies are not standardized and are evolving. Moreover, a company may be able to customize these policies. Policyholders will need to watch to see if these policies only produce another round of coverage litigation or are an effective method of risk management.

 

Robert D. Chesler is a member of Lowenstein Sandler in the firm’s Roseland, N.J., office. This is an excerpt of an article originally published in the April 6, 2012 edition of Law360, available online at www.law360.com.

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