March 21, 2014 Articles

Coverage Issues Arising from Food Contamination Claims

With food contamination or suspected contamination claims frequently resulting in disputes under commercial general liability policies and under property policies, here is a look at the recent case law

by Virginia L. White-Mahaffey

Food-borne illness affects about 48 million people in the United States—1 in 6—each year.[1] The Centers for Disease Control and Prevention (CDC) estimates that each year in this country 128,000 people are hospitalized and 3,000 die of food-borne diseases.[2] FoodNet, the CDC’s network that tracks the incidence and sources of infections transmitted through food, concluded in its recent “report card” that its 2012 data showed “a lack of recent progress in reducing foodborne infections.”[3] Food-borne diseases have turned campylobacter, listeria, salmonella, E. coli, cyclospora, botulism, norovirus, and bovine spongiform encephalopathy (or “mad cow disease”) into household words.

No food seems safe: Lettuce, spinach, cantaloupe, onions, peppers, pistachios, peanut butter, beef, ham, turkey—the list of food products causing or alleged to have caused illness is lengthy and broad. Although produce accounts for 46 percent of food-borne illnesses, more deaths are attributed to poultry than any other food.[4] With the passage of the Food Safety Modernization Act in 2011, the Food and Drug Administration (FDA) will be required to expand its focus on preventing food contamination.[5] Mandatory minimum standards for the safe growing and harvesting of produce will be required.[6] The costs of food recalls, treatment for food-borne illness, and attendant publicity are enormous.

Food catastrophes inevitably lead to questions as to who will bear those costs; growers, manufacturers, shippers, grocers, and restaurants may seek coverage from their insurers. Claims for coverage arising from food contamination or suspected contamination have frequently resulted in coverage disputes under commercial general liability (CGL) policies and under property policies. Recently, as more policyholders have procured accidental product contamination policies, claims submitted under those policies have also required evaluation and, where necessary, judicial resolution. This article addresses the key provisions and exclusions pertinent to coverage for food contamination claims under property policies, general liability policies, and accidental product contamination policies, respectively emphasizing the rulings in more recent coverage disputes.[7]

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