Consumers in today's society are well-educated and carry a heightened expectation that the food they consume will not only be safe, but will be healthy. For food companies to cater to these heightened standards, extraordinary diligence of their food and food-supply chain is required. Any significant lapses will likely result in a recall, potentially followed by consumers' bodily injury and downstream customers' property damage claims. A food company will then be assessing its own first-party property and recall-related damages as well, and may even need to respond to an FDA/DOJ follow-on investigation.
The food company will look to its "food recall" insurers to assist with the crisis and to defend and indemnify any and all claims. Coverage disputes already arise under commercial general liability policies regarding whether there has been "bodily injury" or "property damage" in food contamination claims; and now that the number and breadth of food contamination incidents are increasing. Other types of insurance policies that may provide some "food recall" coverage are similarly being tested. Specialized product contamination policies are being purchased to specifically deal with the exposure, but even these policies must be closely scrutinized due to the varying policy language.