Robin Hood Flour, which has been linked with E. coli, has had a recall for its 20kg bags expanded by the Canada Food Inspection Agency.
At the time of writing at least 26 people had been affected, six hospitalized and a class action lawsuit proposed. The original recall was issued on Friday and expanded on Monday to include Super Keynote Strong Bakers Flour and the Italian Style Flour varieties sold to hotels and restaurants.
Such extensive recalls shine the spotlight on the product liability area of insurance – something that isn’t widely understood according to Julie Ross, Liberty International Underwriters’ senior underwriting manager of global crisis management.
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“There’s a food one and a non-food one,” Ross explained. “A food one will cover the incidents inside a factory; and the non-food one, normally the product has to have left the care, custody and control of the insured person.
“If they think they need to start recalling, they obviously need to let the press and their customers know there’s an issue. So the policy covers notification - if it’s in the paper, on the radio or on the television. Then if they need to store it somewhere because it needs to be quarantined, the policy can also cover that.”
The actual fundamentals of a recall can be quite complicated from a logistical point of view and that’s something a policy can help cover.
“Any additional warehouse space, any overtime for staff is covered as well and other reasonable expenses like transportation,” Ross noted. “Say they need to fill an order and they haven’t been able to because the current product is defective, then they just find that product somewhere else - we’ll cover the extra expenses so they can fulfil that order so that down the line they don’t lose contracts.
“If they have to then re-ship that’s also covered; if they need to do any analysis and inspection of the initial product that’s got the issue, that’s also covered. If they need to then get the product back on the shelves - a lot of stores will charge companies for that - the policy covers that as well.”
Product liability can also help save face for a consumer brand that is looking to rebuild its image, Ross explained.
“If they need to rehabilitate the brand, if they need to do some advertisements, that’s covered under rehabilitation of the brand. So if they feel their brand has been damaged and they want to re-establish it, because that’s as important as anything else, then the policy will pay for that. All it won’t do is pay for regular advertising,” Ross said.
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