Eighth Circuit's Interpretation of "Your Product," "Impaired Property," and Recall Exclusion Under CGL Policy

The Eighth Circuit, applying Minnesota law, held that a CGL policy provided coverage to an insured manufacturer who produced contaminated dry milk and was sued by a purchaser who incorporated the dry milk into its instant oatmeal products.  The carrier argued that the controversy centered on the contaminated dry milk but the Court rejected the argument stating that the insured sought indemnity for damages caused to the purchaser’s instant oatmeal products not for damage to its milk.  As a result, the Court found that the “your product” (instant oatmeal not insured’s product), “impaired property” (dry milk could not be remove from oatmeal so it could not be restored to use), and the recall (damages sought were for property damage not cost of recall) exclusions did not apply.  Netherlands Ins. Co. v. Main Street Ingredients, LLC, 2014 WL 1012793 (8th Cir. (Minn.)). 

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