My favorite product recall story involves Bluebell Ice Cream. In the summer of 2016, Bluebell had to recall their product due to contamination at their Brenham, Texas plant. It was big news in Texas because in occurred during the hottest part of the notoriously warm Texas summer. I have no idea if Bluebell had product liability and product recall insurance coverage before the incident, but rest assured they have it now.
Any manufacturer that places a product into the “stream of commerce” faces these two risks: product liability and product recall. The former is derived from tort law, which places a duty of care on all economic actors to provide safe products . The second happens when a manufacturer has to remove its product because it is somehow unsafe. Both risks are very expensive. Product liability may involve wrongful death costs and can also be pursued through a class action suit. Product recall involves pulling the product from shelves, transporting it back to a warehouse, sending new product to retailers, regaining lost income caused by the inevitable decline in sales, and rehabilitating the company’s public image.
This recent story about ground beef contamination got me thinking about this risk, which happens more often than you think.