When Life Gives You Lemons: Insurance for Food and Beverage Claims

When Life Gives You Lemons: Insurance for Food and Beverage Claims

By: Lisa M. Cirando

Excerpt: 2011 Emerging Issues 5924

When Life Gives You Lemons: Insurance for Food and Beverage Claims

I. Introduction

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. 4 The 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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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.