Spoiled Easter Bunnies Covered By Property Insurance

A Pennsylvania candy maker won a dispute with its insurer, which was required to indemnify the company for 15,000 cases of Beatrix Potter hollow chocolate Easter bunnies. In chocolate industry terminology, the candy rabbits “bloomed” when air conditioning compressors on a warehouse failed. Blooming means either the fats in the chocolate separate or the sugar visibly crystallizes.
In Frankford Candy & Chocolate Co., Inc. v. Valiant Ins. Co., 2006 WL 224237 (Pa.Com.Pl. January 25, 2006), the court held that a two-year delay in requesting property coverage for the air conditioning compressors was untimely and prejudicial to the insurer, who could no longer examine the discarded mechanical parts. If the parts failed due to rust or wear, the loss of the 30-year-old compressors would not be covered. But a 13-month delay in reporting the spoiled chocolate was not prejudicial because the insurer could examine two rabbits that had been saved out of the spoiled batch before it was melted down to make new candy. Under the terms of the policy, the lost candy was covered if destroyed by the failure of the air conditioning, even if had shut down due to a non-covered cause.

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