Liability Insurance Contributing Columnist


‘Sir, There’s a Minnow in my Muenster’:
Recall Insurance Past And Present

Jim Brunker,CPCU, CIC, AIC
Partner, Senior Account Executive Property & Casualty
M3 Insurance

December 13, 2019


Metal, undeclared allergens, and bacteria are just a few of the modern day contaminants that might cause a food processor to issue a product recall.

Turn the clock back to the early 1900s and the list of possible contaminants would not only be more diverse, but also a lot more animated. Lead, formaldehyde, and borax were commonplace additions to foods peddled by unscrupulous processors looking to make a buck by extending a product’s shelf life and passing bad food off for good.

The dairy industry in its infancy was not immune to some of these shenanigans. Author Jerry Apps chronicled Wisconsin’s early cheesemaking industry in his book Cheese, The Making of a Wisconsin Tradition.

He relayed how one farmer, trying to pad his milk check by adding water to his milk cans from a nearby stream, ended up delivering a milk can that included a minnow!

In 1906, Congress passed both the Meat Inspection Act and the original Food and Drugs Act, prohibiting the manufacture and interstate shipment of adulterated and misbranded foods and drugs.

However, the insurance industry had yet to develop a product to cover risks contemplated under the act.

It wasn’t until the 1982 Chicago Tylenol tampering that killed seven area residents that the insurance industry took action.

In 1986, AIG offered the first malicious product tampering policy designed to cover the costs of a recall, loss of earnings, and brand rehabilitation. By the mid-1990s, this tragedy had spurred innovation with many other underwriters offering products for the auto industry and other consumer goods.

As a dairy processor in today’s modern era of FSMA, “minnows” in your cheese vat could take many forms, from pieces of plastic to E. coli contamination.

But it’s a certainty that every dairy processor faces considerable contamination exposure.

Is your insurance coverage ready to respond to a recall today? If you can’t recall if you have recall coverage, there are three questions you should ask.

Do my suppliers have recall coverage under their general liability policies? It is important that dairy processors understand that the standard commercial general liability (CGL) policy will typically not cover most of the costs associated with your product recall. In fact, in the standard unendorsed CGL policy, many of the costs and expenses associated with a recall are actually excluded from coverage. In short, a dairy processor who is depending on their supplier’s standard general liability policy to cover recall expenses are assuming great risk.

Is it possible to add recall coverage to my general liability policy?
The answer is yes, but with limitations. One way in which dairy processors can add some limited recall (product withdrawal coverage) to their policy is by adding an endorsement (AKA Rider) to their general liability policy. This endorsement is commonly referred to as Limited Product Withdrawal Coverage.

The word “limited” in the coverage title is key. A limited product withdrawal policy, while better than no coverage at all, may only cover the basic expenses the dairy processor incurs with the recall.
Many of the recall triggers listed by the FDA may be excluded from coverage, even with this endorsement.

What recall policy should I have if I want to sleep at night? Ironically, the most comprehensive insurance product available to cover a myriad of product recall scenarios is a coverage that doesn’t even have the word “recall” in its name. It’s known as Product Contamination Insurance.

Just as the name implies, it provides coverage if your product becomes contaminated. It is a separate insurance policy and is not an endorsement.

Product Contamination Insurance has come a long way since 1986 and is by far the most comprehensive way to insure against the costs (both yours and your customers’) associated with a recall or contamination issue.

Not only can the policy protect a dairy processor’s bottom line, it can also protect the critical relationships with customers who may incur costs due to the processor’s recall.

However, no two Product Contamination Insurance policies are the same and great care must be taken by your trusted insurance advisor to customize the proper structure for your dairy operation.
For example, coverage can be designed to be triggered by a false claim that your cheese was tampered with, even if it wasn’t.

The best time to read your insurance policy and know what is and isn’t covered is before you end up with a “minnow in your Muenster”.

For more information, call (800) 272-2443 or visit


Jim Brunker

James Brunker CPCU, CIC, is a Partner and Senior Account Executive at M3 Insurance. M3 Insurance offers insight, advice and strategies to help clients manage risk, purchase insurance and provide employee benefits.
For more information, call (800) 272-2443, jim.brunker@m3ins.comor visit

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