By: Lisa M. Cirando
Excerpt: 2011 Emerging Issues 5924
When Life Gives You
Lemons: Insurance for Food and Beverage Claims
Insurance claims involving food and beverages span a wide range. Food-borne
illnesses caused by seemingly healthy foods, such as celery, spinach and
alfalfa sprouts, have captured news headlines. 1 On
occasion, products may be recalled from the marketplace, and stockpiles
destroyed, even though there is no threat to human health. Allegations of
contamination may also lead to costly government investigations as well as to
the loss of good will and reputation for the companies involved. For some, the
losses run so deep that companies are forced into bankruptcy.
Over the last century, advances in science and technology have brought many
benefits in the form of increased protections in food and beverage safety. As
the 21st Century unfolds, traditional food safety issues have given way to
concerns about the use of genetically modified or irradiated foods, especially
to the extent that such practices are thought to have the potential to decrease
natural biological diversity and lead to the development of more virulent
strains of bacteria that are resistant to antibiotics and pesticides. 2 The
prospect of bioterrorist attacks, whether from microbiological, chemical,
physical, or radiological causes, 3 as
well as global warming, environmental damage and the depletion of natural
resources also threaten the viability of our food supply.
Seemingly in response to these concerns, many consumers express nostalgia for a
time when food was minimally processed. Chefs and restaurants highlight their
"farm to table" menus. The international Slow Food movement showcases
sustainable agricultural practices and artisan food production with heirloom ingredients.
rise of farmers markets and "big box" health food stores allows
consumers to indulge their "foodie" passions at home with both
locally and internationally sourced foods. This globalization of markets has
paved the way for access to products from many countries all over the world.
Yet, differences in food safety monitoring and regulations, and widespread
reports of contamination in goods such as milk, baby formula, and pet food, has
led to certain consumables being routinely inspected or banned from import into
the US altogether. 5
With the worldwide web providing almost instant information about virtually
everything, consumers have become more knowledgeable about the foods and
beverages they consume, and the industries that produce them. More questions
are being asked about provenance than ever before. This is especially true with
respect to the popular "green" and "organic" labeling. 6
Similarly, "bad food" claims-relating to allegations that certain
foods may cause obesity or cancer, or to allegations that certain foods contain
undisclosed additives or allergens that harm consumers-have increased in recent
years. 7 Such
claims have even been lodged against the manufacturers of food and beverage
containers. 8 And,
in addition to consumer claims, businesses also must contend with the risks
posed by competitors.9
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ABOUT THE AUTHOR(S):
Lisa M. Cirando is a lawyer at Jones Day who represents commercial
policyholders in coverage litigation against insurance companies. The views
expressed in this commentary are solely those of the author.