Our client manufactured packaging to industry standards for frozen meat products. The client sold the packaging for frozen food products to be stored horizontally. Their customer then packed the packaging with products outside of the industry standards and sold the products to a third party. The client placed fresh meat in the packaging and sold the product for storage vertically. Excess moisture went to the bottom and seeped out.
The carrier is providing liability for the lawsuit for property damage but my customer is not being paid for $100,000 of boxes they made. Their customer used the product according to industry standards from that point forward. The carrier form, Printers Errors and Omissions Liability Including Correction of Work, which includes coverage for product recall, is attached. Would the Printers Errors and Omissions Liability form provide coverage for my client's boxes?
Wisconsin Subscriber
Unfortunately, in reviewing the provided Printers E&O coverage form, we question if the 'boxes' would meet the definition of "printing services or products" as covered by the policy.
"Printing services or products":
- Means those activities usual to the process of producing printed matter
- Includes:
(1) Pre-press, graphic design, duplicating, printing, binding, finishing and distribution services.
(2) The creation, use or manipulation of electronic data that is intended to be printed.
Were the boxes unusable because of the printed matter on them? If so, then the boxes would meet the definition of "printing services or products".
Next, does the replacement of the boxes meet the definition of a "wrongful act"? As defined in part, "wrongful act" means any negligent act, error or omission committed by or on behalf of the insured… In the situation you describe, the insured did not have to replace the boxes due to a "wrongful act" unless the insured's printing on the boxes was deemed to be an error. If the insured is simply replacing the boxes in the same manner and print as originally provided, then there was no wrongful act and thus no coverage.
It is possible the insured may have to seek restitution from their customer's liability policy, or via legal sources; however, this is undetermined based on the information provided.