Polluted water in fruit juice claim

Who pays for the costs of a product recall claim? Do you have insurance in place if it happens to your business? When a polluted water supply was blamed for a fruit juice product recall the company's plant was shut down.

Sundor Canada Inc.of Waterloo, Ontario has accepted a $3.5-million settlement to pay for the recall of its products in 1990.

The water from the local municipal water system was used in the production of fruit juice from concentrate. Small quantities of the chemical NDMA, a suspected carcinogen, were found in the water supply. This resulted in a recall of 120,000 cans from the retailers. Also the facilities at Waterloo were shut down and the company have to relocate their production to another plant.

The resulting investigation determined that the primary source of the NDMA was the Uniroyal Chemical Ltd. plant at Elmira, Ontario. The subsequent lawsuit alleged $20 million in damages.

Uniroyal pointed the finger at Nutrite Ltd. Nutrite manufactured agricultural and garden fertilizers.

The lawyers now advised the best defense and all defendants cross-claimed against each other. It is important to note that legal defense is a big part of your insurance policy, if you have purchased the coverage.

When it was all done Sundor agreed to settle with all the defendants for $3.5 million. This was considerably less than the original demand. Uniroyal paid the largest contribution to the settlement.

Ask your broker or agent about your coverage and know what could happen in a worst case scenario. Can your business have an environmental impact? Do you supply product to a business that does? Take control of your insurance.