As we
reported earlier today, a ground meat recall from the Canada Food Inspection Agency in the GTA has expanded to include the stores Longo’s Foodland and Coppa’s Fresh Market.
Recalls like the current ground meat one are relatively common and carry a considerable number of liabilities - but product recall insurance is an undersold product according to Julie Ross, Liberty International Underwriters’ senior underwriting manager of global crisis management.
“A lot of our role is educating as much as underwriting because it’s such an undersold product,” Ross said. “The message is starting to get out there more but it’s hard to sell something you don’t understand. I was a broker and I was a specialist. Brokers only have so much time in the day… we would [be happy to] hold their hand and help them to work with clients.”
Recalls are always big news because companies recalling products voluntarily or involuntarily must pay to inform the public through the media. For example, many Canadians will remember the widely publicized recall of Bombay Gin which was found to contain 77% alcohol when the bottle claimed to contain 40%.
But Leon Williams, senior underwriter at Liberty International Underwriters said many clients think they’re covered without considering the business interruption exposure.
“There’s actually a product recall sublimit on a commercial general liability policy - it’ll usually be a very small limit like $25,000 or $50,000 and often times a broker or a client who wasn’t aware of the exposure they have, they would think it would be enough to cover them in an instance of a recall,” Williams said.
“But the costs of notification or transportation don’t make up the bulk of the claim expense break down, if there is a claim. Usually things like business interruption costs would be four times as high as their recall costs.”
“It’s quite an undersold product, product recall - it’s only been around for 30 years,” Ross added. “If you think, marine has been around 400 years we’re talking about a very different product. Brokers have to know a lot and they can’t know everything. We work very closely with the brokers that we have to help them understand as best they can.”
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