Damaged restaurant reputation is often the financial fall-out, but seldom insured

A food-contamination crisis can leave a restaurant with a hefty clean-up bill, says A.M. Best, but few realise that the financial damage that comes in the wake of the eatery’s tarnished reputation is seldom insured.
Pam Ritz, president of Specialty Risk Management, a crisis manager for Lloyd’s underwriters, told BestWeek that “traditional insurance, conceptually, tends to be triggered based on an event at a location.”
While product-recall coverage will apply to the manufacturing sector, “what we’re really talking about here is a concept where the mere mention of your trade name in an adverse setting is causing foot traffic to drop,” she said.
Lloyd’s is one of the few carriers that write coverage aimed at helping restaurants and food chains regain reputation following a food contamination crisis, such as an E. coli outbreak.
Through the program, Lloyd’s underwriters contribute capacity of US$79 million per trade name with an excess coverage available that could increase the limit to US$125 million.
With the program, crisis management begins immediately through assistance with the media, handling phone calls, dealing with health officials — all the while piecing together a recovery plan, BestWeek reported.
Washington’s Center for Science in the Public Interest says that produce has been responsible for 639 outbreaks of food-borne illness, affecting 31, 496 Americans between 1990 and 2004.