Proper Product Liability Coverage Key for Wisconsin Cheesemakers

Food & Agribusiness, Property & Casualty

Wisconsin cheesemakers are on top when it comes to U.S. cheese production, yielding more varieties (over 600 different types and styles of cheeses at last count) and more volume (over 3 billion pounds in 2018) than any other state.

Every cheesemaker has a unique story – from a Master Cheesemaker® with decades of cheese making experience to those stirring their very first vat – but, one common theme ties them all together: food safety.

The intense focus on food safety and preventing contamination from bacteria such as Listeria monocytogenes (or “Listeria M”) has been part of the cheese making process for many years. It was in 2001 that the Center for Disease Control and Prevention (CDC) listed listeriosis as a nationally notifiable disease and on January 4, 2011 that the Food Safety Modernization Act (FSMA) was signed into law.

It’s understandable that a cheesemaker might assume the product liability insurance he or she purchases would automatically provide their operation with liability coverage should someone contract a foodborne illness from consuming their cheese. But no cheesemaker should assume that such coverage is included when buying an off-the-shelf policy. Why?

Today’s issues with inconsistent product liability coverage can be traced back to 1986 when the “absolute pollution exclusion” was added to general liability insurance policies by the Insurance Services Office (ISO). ISO is the larger of two national insurance service organizations that collect statistical data and develop standard insurance policy coverage forms on behalf of insurance companies.

In addition, courts throughout the United States have wrestled with the applicability of the pollution exclusion when it comes to food related issues. The result: inconsistency from state to state in interpretation of the policies. For example, the Wisconsin Supreme Court in Wilson Mut. Ins. Co. v. Falk, 857 N.W.2d 156 (Wis. 2014), determined that bacteria are pollutants. If bacteria are pollutants and general liability policies exclude coverage for claims caused by a pollutant, then a claim arising out of Listeria M. contamination could be denied under a typical general liability policy.

Cheesemakers can purchase product liability coverage for foodborne illnesses related to Listeria M. and other commonly found bacteria. But it is critical to know that very few insurance companies provide this coverage automatically or consistently.

Cheesemakers are expected to be masters at their craft, not insurance experts. They should select an insurance broker who understands food and agribusiness risks and knows how to overcome the pollution exclusion found in most general liability policies. It is up to the insurance broker to advise the cheesemaker on which policies will provide coverage for claims arising out of a foodborne illness.

We are proud of our cheesemakers – and, they deserve nothing but the best insurance advisors, best risk management services and most comprehensive coverages available to protect their business, their legacy and our state’s reputation.

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