The insured's involvement in damaging a customer's corn syrup while preparing it to be transported was an occurrence and covered under the CGL policy. Travelers Prop. Cas. Co. of Am. v. United States Container Co., 2017 U.S. App. LEXIS 6602 (3rd Cir. April 18, 2017).

    USA Container supplied industrial containers, logistical services and warehousing to its customers. In 2006, USA Container contracted with Meelunie B.V./ Amsterdam (Meelunie), a corn syrup distributor, to arrange for the transfer of corn syrup from rail cars to drums so they could be shipped overseas to Meelunie's customers. To move the corn syrup from the rail cars to the drums, it had to be heated in accordance with standard operating procedures (SOPs). USA Container contracted with Passaic River Terminal, LLC to perform all of the work necessary to transfer the corn syrup to the drums for transport. Passaic River failed to follow the SOPs, and damaged Meelunie's corn syrup by overheating it. The damage was only discovered after the corn syrup was shipped to Meelunie's customers, who rejected the shipments. 

    Meelunie subsequently sold the corn syrup at a reduced rate. Meelunie demanded that USA Container compensate it for the loss. USA Container tendered the claim to its insurer,Travelers, who denied the claim. USA Container settled with Meelunie and sued Travelers.

    The district court found that under New Jersey law, the policy covered the property damage. Travelers appealed.

    The Third Circuit affirmed. As determined by the district court, the property damage that occurred clearly was an "accident" that "encompassed unintended and unexpected harm caused by negligent conduct." Travelers contended that its policy did not provide coverage to replace or repair defective work. The court disagreed. Under the current case law, the term "occurrence" encompassed unanticipated damage to non-defective property resulting from poor workmanship. 

    Next, Travelers contended that two exclusions, j (6) and n, barred coverage. Exclusion j (6) provided that coverage did not extend to "[t]hat particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it." Here, Meelunie's damaged corn syrup was not "restored, repaired, or replaced" as required by the exclusion. 

    Exclusion n addressed precautionary recalls. The corn syrup was never recalled, however, so this exclusion was not relevant. Accordingly, USA Container's loss was covered under the policy.