Insurance coverage for various food related issues continues to create a myriad of disputes. One recent coverage opinion deals with “employee illness” arising from the manufacturing process. Insurers for Polarome International disputed coverage for two employees’ illnesses related to the manufacturer of diacetyl, a butter flavoring ingredient in microwave popcorn and other foods. The insurers argued that the illnesses occurred before the policies at issue took effect. In contrast, the insured argued that under the continuous trigger theory there was coverage since the employees became more ill within the policy period.
It will not come as a surprise that the parties disagreed as to coverage and litigation followed. Polarome sued its two insurers, Greenwich and Zurich, to defend or indemnify it in the two product liability actions brought by employees. The employees asserted they had developed “popcorn lung” disease from breathing in the chemical used as butter flavoring. The employees in both instances claimed to have developed the illness prior to the policies at issue being put in place. The trial court ruled in favor of the insurers and an appeal followed.
On appeal to the New Jersey Superior Court Appellate Division, the court held that under the continuous trigger theory an injury occurs for insurance coverage purposes at all stages of the injury’s progression. The purpose of this theory is “to resolve doubts about exactly when an injury occurs in a toxic-exposure case.” However, the court found that once the diacetyl related disease manifests itself, the scientific uncertainty is laid to rest. Thus, the subsequent CGL policies at issue were not triggered.
Polarome International, Inc. v. Greenwich Ins. Co., 2008 WL 5245554 (N.J.Super.A.D. December 17, 2008).
This case provides an example demonstrating the importance for policyholders to understand their insurance program and their legacy insurance policies.
McGuireWoods’ Insurance Coverage Counseling & Litigation Group provides legal representation to policyholders in coverage litigation, including bad faith actions. In addition, the firm’s Insurance Coverage Group can provide insurance program audits to assist policyholders to verify that they have the appropriate insurance in place, and what legacy insurance is available.