California vintner sues over ‘smoke-tainted’ wine

A California wine company is seeking $12 million in damages from various Lloyd’s of London insurers including units of Liberty Mutual Insurance Group, the Hartford Financial Services Group Inc. and Travelers Cos. Inc. in a coverage dispute over wine left with a “smoke taint” by the 2017 wildfires.

Santa Rosa-based Vintage Wine Estates Inc. filed a federal lawsuit in the Northern District of California on Friday alleging breach of contract against London-based RSA Insurance Group PLC, and Lloyd’s syndicates of Liberty Specialty Markets Insurance Group, Navigators Underwriting Agency Ltd., Brit Global Specialty and Travelers Marine Cargo.

The London insurers issued a marine stock throughput insurance policy that provided up to $50 million in “all risk” coverage for the company’s winery operations and products, according to court documents in Vintage Wine Estates Inc. v. Royal & Sun Alliance Insurance PLC et al.

However, the London insurers have refused to pay the company for damage to its wines caused by the October 2017 wildfires in Sonoma and Napa counties, and surrounding areas, despite “no clearly applicable exclusions” under the insurance policy, the lawsuit stated.

The wildfires resulted in “significant insured losses, which constitute a new substantial exposure for the insurance industry,” according to the lawsuit.

In response to this increased exposure, insurers providing “all-risk” coverage to California wineries subsequently adopted an absolute exclusion for contamination to grapes, juice and other wine due to wildfires and related smoke taint, it said.

“Importantly, the Lloyds policy, which was issued prior to the wildfires, does not contain any such exclusion. Yet the London Insurers wrongly refuse to honor their promise to insure VWE against this risk,” according to the suit.

RSA, Hartford, Brit and Travelers did not immediately respond to requests for comment. A spokesman for Liberty Mutual said the company “does not publicly discuss litigation.”

The Lloyd’s syndicates in the case are Liberty Syndicate 4472, Navigators Syndicate 1221, Brit Syndicate 2987 and Travelers Syndicate 5000.

Hartford announced its acquisition of Navigators Group Inc. in 2018.