Insurance Law Lesson 74: The Sistership Exclusion (2)

An exclusion with its own moniker deserves a story.

The sistership exclusion comes up plenty in RORs (Lesson 35) as a matter of “throwing everything against the wall.” It is far less frequently a focal point of a coverage determination, in my experience. I can only recall one case where I did significant analysis and discussion of application of the sistership exclusion.

I was representing an insurance company. Salmonella had been found in the insured’s food product. The insured had sold tons of the stuff already. The problem was, the product was actually an ingredient used in a host of other products. It had been sold to other huge food companies who then had to pull all of their various products due to the possible contamination. I believe there were also issues of cost to sterilize potentially contaminated machinery.

It was multi-million dollar mess many times over and, for me, a very interesting glimpse into the layers of the processed food industry.

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