Speaking from 25 years of experience, Bernie Steves, managing director of Aon Risk Solutions in Chicago, says it is not uncommon for companies to assume a recall is already covered by their product liability, or general liability policies, but that generally isn’t the case. A broker can assess the recall-related utility of your existing policies and look at the food safety systems being employed (RFID, pathogen testing, training programs, etc.) to gain an overall picture of a company’s risk; a broker asks upfront what the insurance underwriter is going to be asking later.
“We look at each insured a little bit different,” says Steves. Are you a branded product? Are you a co-packer, or ingredient supplier, is your exposure more first party, or third party? And so on.
Should you purchase a recall policy, and you really should, there are perks you may not be aware of. “One of the most important aspects of these policies is that each of the insurance carriers has retained crisis consultants that are available to assist the insured in the event of an incident.” These crisis consultants are available to assist in managing that situation, experts who have dealt with recalls and know how to effectively recall products, and how to properly get the message out.
“Most of the carriers will also make those consultants available before an incident happens,” says Steves, “and in some instances, the insurance companies will pay some, if not all of the cost of doing a mock recall—bringing consultants in and practicing your recall plan.”
Keep in mind that the insurers are there to help you because they don’t want to pay for a recall any more than you do. It’s their input that may make the difference between thriving, just surviving, or going under.
Canavan is a freelance writer based in Brooklyn, N.Y. Reach him at firstname.lastname@example.org.