Food Contamination: Are you prepared for this potential catastrophe?
One out of every four Americans suffers from a foodborne illness of one type or another every year, and foodborne diseases are a global public health issue affecting every country and citizen.
So what’s behind this growing risk to our food supply?
Population mobility and international travel have certainly increased the risk and spread of foodborne illnesses, but the changing nature of our global food trade is no doubt the biggest culprit.
Our global food network has become increasingly complex, with food production and distribution increasingly centralized and the food supply chain dangerously extended through globalization, offshoring and outsourcing. Global food transport has increased exponentially since the 1960’s, faster than food production itself.
The potential for widespread disaster is enormous. With large scale growers providing food products that might ultimately be distributed to dozens of states across the country and to countries around the world, a single outbreak of contaminated crop from one grower could potentially sicken people in every state and country where that product is distributed.
It’s also extremely difficult to determine the origin of any contamination due to the increasing complexity of the global food trade system. And that uncertainty opens a lot of doors for litigation.
That means you could be vulnerable to this risk no matter what role your business plays in the production-supply-distribution chain. Consider the recent spinach, bagged salad and ground beef outbreaks. Potential targets for liability included a broad range of businesses, starting with growers and ranchers to fertilizer manufacturers and feed distributors….continuing through to packagers, distributors and shippers….and ultimately ending at points of sale, such as food processors, retail markets, restaurants and caterers.
When consumers fall victim to a foodborne illness, they rightfully expect answers. But more than that, they’re going to be want someone to blame and compensation for their loss. They may be entitled to monetary damages to compensate them for their injuries, which can be anything from an upset stomach to death.
Liability for medical expenses, lost wages and any pain and suffering or other lawsuits can quickly overwhelm your business. According to the U.S. Centers for Disease Control (“CDC”), medical costs and lost wages due to foodborne salmonellosis – just one of many foodborne infections – have been estimated at over $1 billion per year.
If a large scale food recall becomes necessary and your business is directly affected, the financial losses can be staggering and the sting can be felt from many sources:
- Removing the recalled product from shelves, transporting and destroying it;
- Lost business due to public awareness of the recall;
- Consumer refunds;
- Costs incurred to rehabilitate your brand’s reputation;
- Liability associated with loss of anticipated profits among various entities in the food distribution chain
Depending on the scope of the food recall and the economic viability of your business, a product recall can financially ruin you.
How prepared are you?
Considering the reach of potential food contamination claims, it’s a loss you need to take seriously and be well prepared for with industry specialized business insurance. Check with your New York business insurance provider to see if your business liability insurance pays for defense costs and indemnity exposure if you have a liability to another company. And make sure your property policies are adequate to cover the loss of your own assets in the event of a food contamination incident.
There are also more specialized policies available today than ever before, and you should explore your options with product recall and trade disruption policies to supplement the coverage provided by your standard liability and property policies.
With our global food supply increasingly vulnerable, make sure you take the necessary steps to decrease your own vulnerability to this potentially catastrophic loss.