Insure Against Food Contamination

Many production managers are interested in reducing insurance costs with the implementation of product traceability, temperature tracking, and food safety systems. The following insurance coverage products would be helpful to consider with these issues.

Marine cargo insurance policy (ocean, air, truck, storage): When it comes to marine cargo insurance costs, temperature tracking is probably the most important element, because this policy protects against physical loss or damage to the product during transit and possibly during storage. Temperature devices don’t necessarily prevent losses from happening, but they can help to pinpoint where the damage occurred and who the negligent third party may be. This is very helpful in subrogation efforts and in reducing the overall impact of a loss.

Product contamination and product recall insurance (lost account and lost customers): Having a good food safety program in place can eliminate the need for insurance in this area. Effective safety programs have an impact on cost, because it is less likely that a company with a good program will have a loss in the first place.

Even when a loss does occur, companies with a good program in place are usually better able to manage than those with a sub-par program, because they are better able to pinpoint the problem and confine the issue before it blossoms out of control.

Rehabilitation (brand name protection): Most contamination/recall policies have limits available for rehab of the brand name in the marketplace. Once again, a company with a good plan in place is less likely to need to rehab its name. However, if a loss were to happen, a company with a good system in place, one that also focuses on public relation issues, can quickly minimize and control a loss.

Product liability (bodily injury/property damage): More and more product liability insurers are moving away from underwriting food risks, especially imports. The news has had a big impact. For example, the press has put out the story that “only 2% of imported foods are inspected,” scaring off a lot of insurers. The more an insured company can show an insurer that it has good practices in place, the better its chances are of securing needed coverage at the best possible price.

Andy Moreno is a microbiological systems engineer at AME, which offers rapid, robust, and validated PCR assays to food safety and production quality assurance/quality control managers. Reach him at [email protected].