Stunted Chicken Ruling Hatches Fight over Defect Exclusion


A New Jersey appeals court's Thursday ruling that adverse side effects caused by chicken feed additive are covered property damage chips away at precedent long relied upon by insurance carriers in product defect cases, but the court's new test for how an exclusion for impaired property is applied sets up fierce battles between insurers and policyholders, experts say.

In a published decision, a panel of the state Appellate Division held that, contrary to a trial court's conclusions, the stunted growth suffered by chickens that ingested policyholder Phibro Animal Health Corp.'s additive constitute an accidental "occurrence" and "property damage" under Phibro's commercial general liability policy with an American International Group Inc. unit.

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