Since the passage of the FDA Food Safety and Modernization Act, signed into law in 2011, and the Consumer Product Safety Improvement Act of 2008, product liability and recalls have become special concerns in the consumer products and food industries. Product liability insurance prices are very competitive with a focus on quality control.
The FDA now has statutory authority to conduct product recalls on food, whereas before they could only request a recall. A large number of food-related companies buy product recall insurance, also called product contamination insurance. The Consumer Product Safety Improvement Act, which applies to all companies manufacturing or distributing consumer goods, steps up reporting requirements and recall obligations if they have a potential to cause harm.
A few issues to think about here:
---As a vendor or manufacturer, you should be prepared for Safety inspections on your products. There should be operational guidelines in place for complying and working with these agency inspections.
---You should consider purchasing “recall insurance”. If your product is recalled by one of these agencies, you will have no options- you must comply immediately. However, the cost of recalling these products is specifically excluded in any General Liability policy, which includes product liability. This process can be wildly expensive and could actually break a company. Recall coverage is available, no matter where the product is manufactured.
---You may also want to consider developing a “recall plan” in case some of your products are recalled. Have a plan contending with 1) where to pick up the products, 2) where to find the products, and 3) where to go with the products. Put this plan in writing.
Consumer protection is here to stay. Make plans now to protect yourself against the high cost of this problem.
Bobby Bland PICA, CIC
Vice President
Commercial Risk Service
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