Food-Grade Product Liability Insurance
Anyone producing a dairy product knows the multiple steps involved in developing a rigorous food safety plan. Dairy processors go to great lengths to identify GMPs, biological hazards and develop preventive controls for allergens, sanitation and supply chains on a pre-event (preventive) basis. So how is it that, after such care is taken to produce safe, high-quality products, a processor can have sub-par food-grade product liability coverage and at times, no coverage at all? The answer to this lack-of-coverage question lies in multiple factors.
Know What Product Liability Is – and What It Isn’t
First, it is important to identify exactly what product liability coverage is and understand why it so critical for food & agribusiness organizations. Product liability coverage is a component of general liability coverage and is the basic building block of a robust insurance program.
Dairy processors can purchase product liability coverage for foodborne illnesses related to Listeria and other commonly found bacteria. But it is critical to know that very few insurance policies provide this coverage automatically. One cannot assume when buying an off-the-shelf policy that this coverage is included.
Know What Your Coverage Handles – and What It Doesn’t
Oftentimes, leadership within dairy processing companies are under the impression that the coverage they purchased includes liability protection against bodily injury caused by consumption of their product. This is true to a point. For example, typical insurance policies would provide product liability coverage if a consumer breaks a tooth on a foreign matter found in your cheese. However, dairy processors cannot assume they have insurance coverage for major liability concerns such as bacterial foodborne illnesses caused by such common pathogens as Listeria monocytogenes.
Also, at times, there is an assumption that anything not covered under a general liability policy will be caught by an umbrella or excess liability policy— but this is not always the case. It is imperative to have affirmative coverage under your primary general liability policy in order to trigger coverage under your umbrella or excess liability policies. If foodborne illness is excluded under your general liability, it is extremely doubtful you’d find any coverage under your umbrella policy. (Another approach would be to address it via a pollution liability policy which we will cover in future articles.)
Partner With Those Who Know What You Need – and Will Help You Get It
Companies of all sizes and sophistication can be victims of inadequate coverage. What is critical in the insurance coverage space is that you are aware of the correct questions to ask to confirm that you have coverage.
It is the duty of the insurance agent or broker to customize your insurance program, to the degree possible, to provide this specific coverage for your food products. And, it is critical that the dairy processor verify, for certain, whether the policy they have selected includes affirmative coverage for foodborne illness. M3’s Food & Agribusiness professionals can help ensure your coverage adequately protects your specific operations.
This blog post is a summary of a longer article by Jim Brunker, which the Cheese Reporter published on June 13, 2017: Food-Grade Product Liability Insurance For Your Food-Grade Products