Several of my clients - along with members of the media – have asked the legitimate question “How will the victims of the peanut butter salmonella outbreak be compensated if Peanut Corporation of America (PCA) is in bankruptcy?”  Well – here is the answer.

PCA has $24,000,000 in insurance from The Hartford Insurance Company which is specifically dedicated to covering the food poisoning claims.  The insurance coverage is broken up into two policy periods – each with $12,000,000 in coverage.  The policy periods are 10/1/07 – 9/30/08 and 10/1/08 – 9/30/09.  

All persons who became ill between 10/1/07 and 9/30/08 will have up to $12,000,000 to divide.  All persons who became ill between 10/01/08 and 9/30/09 will also have $12,000,000 to divide.

But wait – that is not all.  Under the laws of the United States, anyone who sold the adulterated peanut products is strictly liable to pay damages as well. 

So companies like King Nut (who sold the bad peanut butter to nursing homes and schools) and Kellogg’s Corp. (who manufactured the Austin and Keebler peanut butter crackers that made so many people ill) will also have insurance policies available to make up the difference once PCA’s insurance money runs out.  It has already been reported that King Nut has at least $12,000,000 in available insurance funds.

So at the end of the day – there will be many millions available to compensate the victims of this outrageous tragedy.  Let’s just hope these companies - and their insurers – learn to keep another outbreak from happening.