How restaurant insurance can help after a food contamination outbreak

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Protect yourself and your restaurant in the event of E. coli and norovirus outbreaks with general liability and product liability insurance whether it's your fault or not.
Microscopic e coli bacteria.

Chipotle’s meteoric, cilantro-scented rise has come screeching to a halt. The national fast food chain is facing a huge financial challenge after multiple outbreaks of e. coli and norovirus have been linked to restaurants around the country. The Washington Post reports that Chipotle’s sales were down 15 percent for the most recent quarter, and down 30 percent in just the last month.

Could a situation like this happen to your restaurant? Absolutely. And recovering from an illness outbreak, as Chipotle’s numbers show, can be costly.

Fortunately, restaurant insurance can help you handle the headaches and costs of an outbreak. Keep reading to learn how.

Get product liability insurance included in your general liability policy

Every restaurant owner should have  general liability insurance, which is best known for covering slip-and-fall accidents and customer injury. It’s basically a must-have for businesses that are open to the public.

Included in most general liability policies is what's known as product liability insurance. This is the key coverage that can help in the event of an illness outbreak. The concept of product liability refers to the responsibility you have as a restaurant owner to the people  buying your food. If they become sick or injured by your food, they have a right to try to recover their losses from you. In the event of a large norovirus outbreak, for example, this might mean a whole lot of people suing you to cover their hospital bills. Or one very big lawsuit, if someone dies (see Catering gig turns into $2.9 million lawsuit”).

If you have product liability insurance, it can:

  • Cover claims of food poisoning or foodborne illness.
  • Pay your legal costs in the event of a covered lawsuit over illness outbreak.

The good news is that this coverage is probably already included in your general liability policy, so you don’t have to do anything special to enjoy its benefits. But it’s always a good idea to read over your policy or talk to your insurance agent to make sure you have the coverage and that it will cover an outbreak.

The takeaway: product liability insurance can cover the costs associated with foodborne illness outbreaks. Be sure it’s included in your general liability insurance.

Practice proper food safety, but know you can still be liable

It's important to note that you can be held liable for an outbreak even if it isn't your fault. This is because many states have laws outlining the doctrine of “strict liability,” which favors consumers over sellers and manufacturers in issues of product liability. Because it can be exceedingly difficult for a consumer to find out where a product was contaminated or made faulty, any business involved in the production of something (vendors, distributors, manufacturers) can be held legally and financially responsible for the damages to the consumer.

For restaurants, this means that you can be held liable by a sick consumer even if the raw ingredients were contaminated when you bought them.

By practicing proper food and cooking safety (see Restaurant.org’s helpful food-safety page) you can minimize your risk of illness outbreak significantly, but you won’t eliminate it. There’s always a chance something will slip through. Luckily, product liability insurance can cover you whether it’s your fault or not. Indeed, in many cases, it’s almost impossible to tell exactly who’s at fault for food contamination. 

The takeaway: suppliers, vendors, and restaurants can all be held liable for a foodborne illness outbreak, regardless of fault (in most states).

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