Mango Pulp Contamination: Occurrence Trigger, Aggregation and Late Notification

Trigger. The policy is written on an occurrence basis, so the trigger is the date of the bodily injury, not the date of the contamination and not the date of the claim. The injuries occurred in March 2024, so the 2024 policy responds, even though the defective batch was produced and released in 2023.

The November result. It does not move the occurrence into 2023, because no injury had occurred then. But it matters in three other ways. First, if the policy contains a 'known circumstance' or 'known defect' exclusion, the insurer may argue that Sunripe knew of the contamination before the policy renewed and that the 2024 policy should not respond. Second, releasing a batch after its own laboratory flagged a problem may amount to a deliberate act, which liability policies exclude. Third, the 2023 policy may have to be notified as a circumstance, and if it was also occurrence-based it will not respond unless injury occurred during its period.

Agent's action. Notify both policy years, provide the laboratory report voluntarily, and let the insurer take the coverage position in writing. Withholding the report would turn a difficult coverage argument into an allegation of misrepresentation.

Aggregation. Most liability wordings define an occurrence as one event or a series of events arising from one source or original cause. All 40 illnesses trace to a single batch and a single contamination event, so they should be treated as one occurrence. That produces one limit of PKR 25 million and one deductible of PKR 0.5 million, rather than 40 deductibles, which would otherwise consume the entire claim.

The hotel chain. The PKR 6 million is for cancelled orders and loss of reputation. A product liability policy covers bodily injury and property damage, and sometimes the resulting loss of use of property that has been damaged. It does not ordinarily cover a customer's pure economic loss or reputational harm. The hotel claim is therefore likely to fall outside the insuring clause unless the policy has a specific extension, and it should not be aggregated with the injury claims.

Numbers. Admitted injury claims are capped at PKR 25 million, less the PKR 0.5 million deductible, subject to the aggregate of PKR 50 million for the year if further occurrences arise. If defence costs are payable in addition to the limit, they do not erode it; if they are inside the limit, the indemnity available to claimants is reduced. The agent must confirm which basis applies before promising the client anything.

Evaluate the insurer's position. Late notification is only a complete defence if the policy makes notice a condition precedent and the insurer has suffered prejudice, or if the delay is so serious that it amounts to a breach going to the root of the contract. Here the notification came on 15 March 2024, apparently soon after the illnesses were reported, so the delay is short. The real issue is not the date of notice but the November 2023 laboratory result, which the insurer will characterise as a known circumstance. The agent must separate the two arguments rather than accept a single-line declinature.

What the agent should do.

1. Request the declinature in writing with the specific clause relied on.
2. Provide a full chronology showing when Sunripe first learned of the illnesses and when it notified.
3. Disclose the laboratory report and the batch records; a voluntary disclosure supports the insured's credibility.
4. Check whether the policy has a 'circumstances' extension and whether the 2023 insurer should also be put on notice.
5. Remind the insured not to admit liability to the claimants and to preserve the affected batch for testing.
6. Escalate internally and, if the insurer maintains the declinature, refer the matter to the broker's claims advocacy team and consider the insurer's complaint and dispute process.