Despite all the investments companies make to ensure their products are safe, sometimes an unsafe product or contaminated food makes it to consumers and a recall is necessary. Foodborne illness can have a huge impact for people, communities and businesses.

With more than 1 million restaurants in the United States, the risk of foodborne illness is a serious concern for restaurant owners. While large chains may face losses of up to $1 billion from a major recall, smaller restaurants can be devastated just as easily, often with fewer resources to recover.

A Real-World Example

Mariscos San Juan, a Mexican seafood restaurant in downtown San Jose, California, experienced a devastating incident when a sick employee infected approximately 80 people with Shigella bacteria. Multiple people were hospitalized, and the resulting fallout ultimately forced the restaurant to close its doors permanently.

This case illustrates how a single foodborne illness incident can destroy a restaurant business, making people sick and causing a dramatic decrease in patronage.

The Insurance Gap

Many restaurant owners assume their General Liability insurance will protect them in the event of a foodborne illness incident. However, General Liability insurance typically does not cover foodborne illness claims. This leaves a dangerous gap in coverage that most owners are unaware of.

In fact, fewer than 3% of restaurants carry Product Recall Insurance. This means the vast majority of restaurant owners are completely unprotected against one of the most significant risks they face.

Understanding Product Recall Insurance

Federal agencies recall an average of 4,712 products annually. Product Recall Insurance covers first-party expenses, which is distinct from third-party Product Liability insurance. This coverage protects restaurants from the financial devastation of business interruption and contamination incidents.

Product Recall Insurance policies are triggered by eight potential events:

1. Foodborne illness — contamination that causes illness in customers
2. Supplier contamination — tainted ingredients from your supply chain
3. Public health authority announcement — government agency warnings or actions
4. Malicious tampering — intentional contamination of products
5. Adverse publicity — negative media coverage affecting your business
6. Workplace violence — incidents that disrupt business operations
7. Product extortion — threats to contaminate or harm products
8. Disease outbreak — widespread illness affecting your establishment

Protect Your Restaurant

Business interruption and contamination coverage protect restaurants from patronage loss and financial devastation. Do not wait until an incident occurs to discover that your current insurance does not cover you.

Let us help you with the right insurance. Contact Rick Cline at All Access Insurance, located at 9200 W Cross Dr #210, Littleton, CO 80123. Call (303) 932-1700 or email rick@allaccessins.com to get a quote today.