Hunton Insurance Attorneys Syed Ahmad and Geoffrey Fehling provide several updates on the latest insurance revocation disputes in the latest edition of the Recall Roundup, published on the Hunton Retail Law Resource Blog. of an insurer's proposal to reject a $ 15 million compensation claim paid for the settlement of an underlying flour recall was the subject of an earlier post on this blog.
The second decision deals with the basic insurance issue in good time. Withdrawal of insurance – like other insurance – often involves potential issues related to notification requirements. A threshold issue in these disputes is which facts or circumstances trigger the obligation to disclose in the first instance. A recent court decision clarifies the significance of the warning trigger during product contamination insurance.
The case was filed by George & # 39 ;s Inc. and affiliated companies, all of which were involved in producing ready-to-eat (RTE) meat and poultry. products and had had more than $ 3 million in losses. To protect against risks related to salmonella contamination and product recall, George purchased insurance. The police demanded notification within 30 days of the "first discovery of [an] incident that may be covered under the terms of this policy."
Insurers argued that the 30-day deadline should have begun when the US Department of Agriculture. (USDA) notified George & # 39 ;s of a single positive salmonella test as a result of the government's routine product testing. George & # 39 ;s argued that the USDA message was insufficient to start the clock because it had to evaluate whether the various coverage requirements were actually met. This process took time, Georges claimed, and so the 30-day window did not begin when they received the USDA message.
The court agreed with Georges. By applying the rules of the Arkansas Act, the court recognized that "an insured must strictly comply with a provision on insurance notices" and that insurers were not required to show any prejudice, as the notice was a condition preceded by the insurance. However, the court rejected the insurers' argument that George failed to file a claim due to late notification.
The court noted that after the "first positive test", George still needed to investigate further to determine if an insured event had occurred. “And had to evaluate the amount of product that was potentially affected. As a result, the court found that George & # 39 ;s "probably claimed that [it] did not" detect an insured event "" until six weeks after the first test results and allowed the case to continue.
Correct and sufficient notice is of the utmost importance in all insurance claims. Failure to comply with all notice requirements may track a claim before it even begins. Recall insurances in particular can present nuanced messages, such as the issue of "discovery" of the relevant contamination event in Georges which can vary widely based on policy variations or applicable state law and should be kept in mind. to maximize recovery in all recall claims.