(Article from Insurance Law Alert, November 2025)
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Holding
The manufacture of a product containing toxic ingredients, which allegedly resulted in progressive bodily injuries, constitutes a single occurrence under liability policies. Additionally, coverage under applicable policies is based on a continuous trigger approach, and coverage is not barred by a “damage first occurring” exclusion. Wild Flavors, Inc. v. Wausau Underwriters Ins. Co., 2025 U.S. Dist. LEXIS 206720 (E.D. Ky. Oct. 20, 2025).
Background
The coverage dispute arose out of various suits filed since 2005 against WILD based on its manufacture and distribution of food flavoring products containing allegedly toxic chemicals. Several of WILD’s insurers agreed to defend the suits and indemnify subsequent settlements, but Wausau denied coverage. WILD sued Wausau and other insurers, seeking a declaration of coverage and alleging breach of contract and bad faith. Various parties cross-moved for summary judgment, which the court granted in part and denied in part.
Decision
First, the court concluded that the underlying claims arose from a single “occurrence,” defined by the policies as an “accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The court explained that under Kentucky’s cause-based approach, the manufacture of the food flavorings was the operative event, rather than each shipment of the product. The court noted that exposure to toxic ingredients “is more similar to asbestos cases than a distributor forwarding products it did not manufacture, or a mis-shipment of an otherwise normal product.”
Second, the court ruled that a “damage occurring first” exclusion, which applied to bodily injury that “first occurred prior to the effective date of this policy,” did not bar coverage. The court deemed the exclusion ambiguous in the context of the claimants’ progressive pulmonary injury issues. The court distinguished decisions in which courts applied similar exclusions, noting that the policy language in those exclusionary provisions was more expansive than that presented here.
Finally, the court adopted a continuous trigger test to determine which policies were implicated by the underlying claims. While the court noted that under Kentucky law, the trigger of coverage turns on the specific facts of each case, it concluded that the progressive nature of the pulmonary disease at issue warranted application of a continuous trigger.
Comments
The majority of jurisdictions have endorsed a cause-based test for determining the number of occurrences. However, as the court observed, this standard can result in “diametrically opposite results,” even in the context of similar factual scenarios. The ruling posits a possible, partial explanation for this inconsistency: Some courts require proximate causation while others apply a “liability event” method, which focuses on the more immediate event that gives rise to the insured’s liability. The WILD Flavors court endorsed the former, focusing on the “proximate, uninterrupted, and continuing cause which resulted in all injuries and damage.” (Citations omitted).