New policy covers growers in a recall situation

When a recall occurs, processors and shippers are usually insured from product loss and the associated costs. But until now the grower hasn’t had that protection.

“The growers are left holding the bag, and sometimes they don’t have a big enough bag to take care of the problem,” said Tom Elms of The Thomas Group Insurance Co., Safford, Ariz.

Elms’ company is offering a first-of-its-kind recall insurance for growers. The policy, underwritten by the 300-year-old insurance company Lloyd’s of London, covers the losses associated with a recall, even one not directly attributed to the grower.

Following the 2006 outbreak of E. coli O157:H7 traced to bagged spinach, Elms said he began to look around at the insurance available to farms at the prompting of Western Growers Association, a group he works with to deliver Western Growers’ health benefits to members. Elms found there wasn’t any insurance offered to fruit and vegetable growers that would protect them during an outbreak, even though similar programs are offered to the beef and grains industries. Retailers, shippers and processors could buy premiums that included outbreak and recall coverage, but growers could be stuck paying for returned, destroyed or repackaged product.

After researching the markets and finding a need for such a policy, Elms submitted his proposal to Lloyd’s of London, which spent seven months writing it. The policy covers everything in a recall situation – direct loss to the grower, reimbursement to the grower’s customers, the cost of pulling and returning contaminated product and repackaging costs.

“It covers everything that you might get dinged for, everything that comes down the pipe from that recall,” Elms said.

The policy goes into effect even if a recall isn’t for that grower’s product but impacts the entire industry, such as with spinach in 2006 and tomatoes and peppers this year. There’s even language in the policy that insures growers against intentional contamination or extortion by employees, Elms said.

Thomas Group Insurance started offering the policy in Arizona in July and will be rolling it out nationwide. The response so far has been good from growers in Arizona, and it will be introduced in Texas alongside the Western Growers’ health benefits, as that association expands into the state. Elms said he hoped to offer the recall coverage to growers throughout the United States, Mexico and Canada soon.

The cost is $2,500 a year per $1 million in coverage, Elms said. The application is a simple, one-page document available from The Thomas Group Insurance at

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