In This Alert:

- Product Recall I: The Product Recall and Impaired Products Exclusions

- Product Recall II: The Communicable Disease and Fungi and Bacteria Exclusions

- Failure to Warn

- Property Insurance: The Contamination Exclusion

- One to Watch: PBM Nutritionals, LLC v. Lexington Ins. Co.

- Take-Aways

- Insurance 101: NOTICE! NOTICE! NOTICE!

Excerpt from "Product Recall I: The Product Recall and Impaired Products Exclusions"

What happens when your product causes another product to be recalled? Security National Insurance Company v. GloryBee Foods, Inc., No. 09-1388-HO, 2011 U.S. Dist. LEXIS 27267 (D. Or. Mar. 15, 2011), concerns this common insurance issue. There, GloryBee Foods, Inc. (“GloryBee”), sold 80,000 pounds of roasted peanuts to Nature’s Path Foods (“Nature’s Path”). Critically, the peanuts were incorporated into Nature’s Path product in such a way that they could not be removed without damaging that product. When GloryBee’s peanuts were recalled, Nature’s Path’s product had to be recalled. Nature’s Path sued GloryBee for its damages. GloryBee gave notice of the claim to its insurer, Security National Insurance Company, under its general liability insurance policy, and Security commenced litigation against GloryBee, asserting that the policy’s product recall exclusion barred coverage....

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