A policy defined ‘accidental contamination’ as an error in the production, processing or preparation of any insured products provided that their use or consumption ‘has led to or would lead to bodily injury, sickness, disease or death’.

The authorities in California closed down a poultry farming operation after noting a high prevalence of salmonella and non-compliance with federal sanitation regulations that led to a cockroach infestation. The underwriters denied coverage on the grounds that the insured could not show that its errors in production had led to or would have led to bodily injury or death.

The US court held that it would be unreasonable to imply that a contaminated product must first be put into the market and injure somebody before the policy will provide coverage. The policy could not reasonably be interpreted to encourage a producer to sell goods that have been deemed to be unfit for consumption thus risking the public welfare and subjecting itself to civil liability and criminal prosecution.

All the insured had to show was that the products were erroneously produced and at least some of those products would have caused harm if consumed, without having to show a specific kind of ‘bodily injury, sickness or disease’. The reasonable probability of harm was sufficient. The underwriter was obliged to cover the losses.

[Foster Poultry Farms Inc. v Certain Underwriters at Lloyd’s London]