Major Pasta Recall Illustrates Issues That Could Arise Under Food Contamination Insurance Policies

Since June, the FDA, USDA and CDC have been investigating a multistate outbreak of Listeria monocytogenes infections linked to prepared meals. In September, the outbreak was traced to a supplier of pre-cooked pasta, Nate's Fine Foods. Even so, Nate's Fine Foods reports that thorough inspections and testing at its facility have come back negative. As of October 30, 2025, 27 illnesses, 25 hospitalizations and 6 deaths have been reported.

This outbreak has led to not only one recall, but a slew of interconnected recalls. Nate's does not sell its pasta direct to retail. Rather, the pasta is incorporated into numerous products by various manufacturers and sold at many different stores nationwide. With the outbreak now over 6 months old, the list of recalls still continues to grow.

This outbreak serves as a reminder of the key issues that arise for food contamination/recall insurers when faced with insurance claims relating to such events. For instance:

• Actual contamination requirement. Most food contamination or recall policies require that the insured's product be actually contaminated with a hazardous substance. The Listeria outbreak is certainly real in a general sense—but with respect to any insurance claim under a contamination policy, the focus is on the insured's product. With outbreaks such as this one, caution or prudence—or sometimes, even threat of government action—results in voluntary recalls of products that are merely suspected of incorporating the contaminated ingredient. If no contamination is ever actually found in the insured's product, the policy may not provide coverage.
• Cause of the contamination. Some contamination policies narrow the scope of coverage based on cause of the contamination—for example, contamination caused by the insured's error, or at least originating at the insured's facility. Obviously, this would be a significant issue for insurers of downstream customers of Nate's Fine Foods.
• Reporting. Most contamination policies contain strict deadlines for notice to the insurer, such as termination of the policy period or a certain number of days after the recall or after the insured learns of the contamination. This can sometimes require investigation of when the insured learned of the contamination of its product—or whatever the triggering event may be under the applicable policy.
• Scope of loss. Situations involving incorporation of a contaminated ingredient can bring questions of whether a customer's lost product constitutes "property damage," such that it may fall within the scope of a CGL policy—and not the contamination policy. If coverage includes loss of business income, issues could arise regarding whether lost profits were speculative or not caused solely and directly by the contamination event.
• Subrogation issues. The spread of recalls and resulting losses among various companies that bore no fault for the contamination could give rise to subrogation claims by recall insurers against the party at fault for the contamination. It is important for insurers and their insureds to preserve those subrogation rights.
• These are all merely examples—as every claims professional knows, you need to read your policy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.