On January 10, 2010, the Associated Press reported results of laboratory tests of 103 pieces of low-priced jewelry manufactured in China and sold by American retailers. The AP determined that 12 of these pieces contained high levels of cadmium, a known carcinogen that is suspected to hinder brain development in young children. All of the items in question were found to contain cadmium levels of at least 10 percent, with some of the items containing cadmium levels in excess of 80 percent.

"The discovery of cadmium in jewelry is likely to lead to significant exposure for jewelry distributors and retailers, as well as their liability insurers," says Joseph Bermudez, partner in the Denver office of Nelson Levine de Luca & Horst, a national law firm focused on the insurance industry, and experienced in crisis management, international food contamination and product recall issues. "It is also likely to raise numerous coverage issues.

"For example, a number of commercial general liability policies contain exclusionary provisions pertaining to toxic metals and/or carcinogens," continued Bermudez. "Coverage issues are also likely to arise with regard to whether the sale of jewelry containing cadmium can be deemed to be a 'sudden-and-accidental' event, so as to invoke coverage under the standard language of most commercial general liability policies. Furthermore, the determination of the number of occurrences for each liability claim submitted to an insurer is likely to result in coverage disputes."