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Reversing an Iowa district court decision, the Eighth Circuit ruled that losses caused by the use of defective plastic storage bags were caused by a covered “occurrence” under a general liability policy.  Decker Plastics Inc. v. West Bend Mutual Ins. Co., 2016 WL 4409348 (8^th Cir. Aug. 19, 2016).

Decker, a manufacturer of plastic storage bags, was sued by a landscape supplier after it discovered that the bags were defective and deteriorated in sunlight.  The deterioration caused small pieces of plastic to commingle with landscaping materials.  As a result, the company had to clean materials from customers’ properties, purchase replacement bags from another supplier, and clean its own premises.  Decker settled the lawsuit with the landscape supplier and sought coverage from West Bend.  The insurer denied coverage, arguing that there was no “occurrence” under the policy.  An Iowa district court agreed and granted West Bend’s summary judgment motion.  The Eighth Circuit reversed.

Citing precedent in the defective construction context, the Eighth Circuit ruled that the claims alleged an occurrence because the defective bags caused damage to property other than the bags themselves.  The court stated:  “We have repeatedly construed ‘occurrence’ to cover damages to property that was not the insured’s work product.”  The court remanded the matter to the district court for a determination of whether coverage was nonetheless barred by a “your product” or an impaired-property exclusion.