If your current insurance does not cover recalls, you should of course consider whether, and at what level, this type of insurance is really needed. In the end, the decision to buy recall insurance should be driven by actual demonstrable risks. We often consult with clients to identify their greatest vulnerabilities and then help them determine, given the level of risk, whether recall insurance would be appropriate. The answers to these questions, of course, vary greatly depending upon the specific operation and food products at issue. Moreover, while recall insurance has been quite expensive over the last few years, premiums are beginning to normalize with additional competition. This trend will continue as awareness increases and more insurers begin offering this type of insurance.
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Finally, before any final decisions are made, it’s also imperative to understand that, in the food industry, there is no such thing as a standard or uniform approach to recall insurance. There are many different types, and the scope of coverage from policy to policy can vary greatly. In addition to the different types and levels of coverage, there can also be significant differences between the insurance companies themselves, what they charge, and how they respond when a company faces a crisis.
It is critical for food companies to understand that the risk of being affected by a recall, either directly or indirectly, is substantial. In turn, companies should carefully review and audit their existing insurance to ensure adequate coverage in the event of a recall. Finally, when questions arise or additional advice is needed, food companies should not hesitate to seek out expert help. A knowledgeable food safety lawyer can provide critical insights for companies who want to check whether their existing or proposed coverage will indeed protect against outbreak and recall-related contingencies.
In the end, when insuring against the inevitable, make sure you’re actually insured.