Food product liability is the existential threat to food business. In just about every state in the United States, food manufacturers are held strictly liable for the personal injury caused by their products. Strict liability means liability that does not depend on actual negligence or intent to harm. If a food producer merely places a defective product into commerce that causes harm to a consumer, the food producer is liable for all of the consequences of the harm. Food manufacturers stand to lose everything in a civil suite if their products cause an illness or injury. This is the highest standard of care that one person can owe to another, and it is the standard of care that food producers owe to their consumers.
This simple and frightening fact drives most of the resource allocation considerations in a food business. A grave threat requires comprehensive management. A mature food business can handle the risk by utilizing as many of the following tools and techniques as possible:
- The best defense is science-based. We routinely refer clients to incredible food safety specialists that to consult with you on your process. This is the first step towards adopting the “zero defect mentality” that is the best defense against strict liability.
- Contracts are superb risk mitigation tools. A shrewd food business can utilize written agreements to push the cost of liability onto other parties, both up and down the supply chain. Food product liability is no different from any other liability. You can often negotiate with product suppliers or product manufacturers to assume some or all of the risk of food product liability.
- A robust commercial general liability policy, adequate to the scale of your potential liabilities, and adequate to protect the amount of property you need to protect.
- Audit your supplier agreements to ensure that your commercial liability policy is coextensive with the promises you’ve made to your buyers. For example, if you are a supplier to a major distributor that requires a minimum $5 M in coverage, then buy a policy that matches the obligation. It seems so simple but new food businesses, in their eagerness to land a big buyer, often overlook things like this.
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