A farm that provides fresh produce to a local restaurant just five miles away. A beekeeper who sells honey at the local farmers’ market. A small, family-owned dairy that produces organic cheese for a local winery. What these and other small farm operations have in common is that, like other small-scale farms, they are exempt from certain provisions that include mandatory inspections under the Food Safety Modernization Act (FSMA).
For customers of these small-scale farms, you could say there remains a level of trust that the food and products they buy are safe. In fact, it’s the quality and good reputation of these local operations that keep customers coming back for more. But like any type of food product, things can go wrong no matter how careful the operation is. And when issues do arise, they can be costly — both financially and reputationally.
However, the fact that many small-scale farms are exempt from the FSMA provisions doesn’t mean they can’t be held liable in the event someone becomes ill from their product. In addition to court costs, a farmer could also be held liable for a lifetime of medical expenses. Today, the industry is seeing many small farms being sued – not by the customer, but by the health insurance company representing the customer.
Mitigating Risks with the Right Insurance
Today, E. coli, salmonella and listeria can contaminate food products and crops and make them dangerous to consumers. In fact, the Centers for Disease Control and Prevention reports that 1 in 6 Americans suffer from foodborne illnesses caused by pathogens in foods every year, resulting in over 3,000 deaths.
There’s no doubt that we live in a litigious society. From attorney and court fees to settlements, expenses related to a lawsuit involving contaminated products can add up quickly. That’s why it is critical for both large and small farmers to assess, reduce and mitigate their exposure to the risk of potentially contaminated food products. One way to lessen the impact of a loss is with product liability and product recall coverage.
Unfortunately, many small-scale farmers don’t believe they have a large enough exposure to justify the cost of an insurance policy. And there are others who believe their general liability policy will be enough to cover costs should an incident happen. The fact is, most commercial general liability policies don’t include coverage for issues involving a product recall event. When it comes to product liability, farm operations whose contaminated foods make consumers ill are subject not only to liability costs for third-party bodily injury, but also for other monetary losses, such as their own loss of income/potential income, and potential recall costs of customers.
Today’s agricultural products produced by small-scale farmers are being expanded into an array of new goods as growers/producers look for opportunities to expand their brands. But along with these changes to develop additional revenue streams also comes the potential for new and even different exposures, in addition to those for which product liability risks inherently exist.
Today, more than ever, it is critical to educate your clients who have smaller-scale farm operations that when it comes to the products they grow, they are at risk of being sued just as much as large farm operations are – and they should consider securing the additional risk protection of not only product liability insurance, but also product recall insurance.
To learn more about the products and services mentioned in this blog, or for answers to coverage questions, please contact David Fiske at 312-465-5305 or email@example.com or Lori Hunter at 213-236-4585 or firstname.lastname@example.org.