Robert F. Roarke Partner

While governmental regulatory actions can have significant financial impact on the marketplace, in the instance of a governmental product advisory, a standard insurance portfolio of general liability and property policies offers no protection. Companies should consider governmental recall and adverse publicity coverages that are contained in product contamination and product recall policies to protect their bottom line.

The bombings that occurred in Boston on April 15, 2013, have been classified as an act of terrorism. Whether the bombings meet the definition of a terrorist act that is found in most Event Cancellation/Contingency insurance policies exclusions or endorsements can raise significant coverage issues. 

Companies involved in a food safety crisis need to properly prepare to respond to extremely short deadlines and the FDA’s information demands by acquiring a product contamination policy that includes crisis management entitlements and consultant costs.

On September 22, 2011, the United States District Court for the Northern District of Illinois, Eastern Division determined that no coverage existed under an accidental product contamination policy where the products were never actually contaminated with harmful bacteria.

Appellate decisions, such as the one issued recently by California’s Sixth District Court of Appeal in Fresh Express Incorporated v. Beazley Syndicate, can provide important insight to the insurance industry for developing and refining coverage forms. In this case, an E. coli outbreak was determined not to be an “accidental contamination” as defined by the policy at issue, and therefore not an “insured event.”