Food Contamination – What’s Really Covered?


Insurance companies that offer restaurant insurance can provide endorsements tailored specifically to the restaurant industry.

Many endorsements include the term “Food Contamination”. The policy provisions can be closely examined to see that the first party coverage (your property, your income) for food poisoning may vary from one insurance carrier. Many policies will not cover first party claims when your restaurant is closed or suspended by the Board of Health.

The reputation of your restaurant is its most valuable asset. A restaurant owner must take immediate steps to protect its reputation in the case of a foodborne illness outbreak.

Look for policy language that provides coverage when you buy coverage for first-party food contamination

(1) If your premises are ordered to be closed by a Board of Health;

(2) You, or any government entity, make an announcement alerting the public to a possible health hazard due to the discovery or suspicion that contaminated foods were served at your patrons in a place described in the Declarations.

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You can avoid surprises by carefully reading your policy language, which could contain coverage restrictions. The following definition is common in insurance policies:

Food contamination refers to the possibility of food poisoning in one or more customers as a result of food poisoning, suspected food poisoning, or “communicable diseases” transmitted by your employees.

This definition includes two triggers: first, food poisoning resulting from contaminated food purchased and second, communicable diseases transmitted by one or more employees.

If the first trigger is tainted food that you bought, it could be grounds for denial of coverage.

A second trigger, which could be a communicable illness transmitted by one or more employees, could lead to denial of coverage. A variety of policies include the following definitions of communicable diseases:

A bacterial microorganism that is transmitted by human contact to food is known as a communicable disease.

This could result in your coverage being void for food contamination caused by a Norovirus or Hepatitis A virus. These viruses are considered to be viruses, but are not bacterial microorganisms. You should also consider the following: You should also consider that not all policies cover:

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Cost to replace consumables declared contaminated or recalled by the local Board of Health.
Cost of medical tests and vaccinations required for infected employees
Your actual expenses to pay patrons for reasonable doctor’s care, medical tests, and hospitalization that was required by them consuming contaminated food in a covered area;

Extended business income beyond the 30 day mark;

You may lose your business income, which could include tips from servers

Advertising is a cost-effective way to improve your image.

Although food contamination claims are a small portion of the total claims, there are more than 935,000 dining establishments in the US. Most restaurant owners are well aware of the risks and take preventative steps to avoid food borne illnesses.

Even the most reputable restaurants can find themselves in legal trouble for food-borne illness claims allegedly originating from their restaurant.

Restaurants can quickly go bankrupt from an unplanned event. Proper safety measures, a plan for crisis management, and the purchase of insurance can help to mitigate this risk and protect your business’ assets.

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