One recent appellate decision puts manufacturers on notice that they must take care in purchasing commercial insurance policies to ensure that their general liability policies provide the coverage they expect. A California appeals court has just handed down a verdict siding with insurer Lloyds of London in the insurance company’s denial of a claim involving $3 million in recalled beef used in frozen tacos and burritos. In Windsor Food Quality v. Underwriters of Lloyds, et al., the appellate court found that the policy underwritten by Lloyds covered the products made with the beef, but not the beef itself. The recalled beef was used in frozen tacos and burritos manufactured by Windsor Food Quality Company and marketed under the brand name, “Jose Ole.”
Windsor Food, which had a $4 million “Products Contamination Insurance” policy with Lloyds that covered “Accidental Product Contamination” and “Malicious Product Tampering,” had filed the claim shortly after the beef was recalled in 2008, as part of the largest beef recall in US history. Lloyds rejected Windsor’s claim on the grounds that it did not insure the beef, just the products in which the beef was used, and that there had been no accidental product contamination or malicious-product tampering of the product itself.