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Whether Dry Cleaner’s Insurer Defends In Pollution Case Depends on His State Court’s Definition of “Suit” |
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Written by David A. O’Neill, J.D.
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Historically, the dry cleaner’s business insurance policy has been a package policy with more than one line of insurance in it. One of these lines is typically general liability insurance—the type of insurance that protects the business against liability from injuries to customers or to the property of others. The standard general liability coverage available to small business owners has for decades been comprehensive general liability coverage and is usually found in section two of the package policy. The insuring agreement of many of these comprehensive general liability (“CGL”) policies contains the insurer’s promise to defend the small business owner (“the policy holder”) against any “suit” against him, seeking damages for bodily injuries or property damage covered under the policy. What is covered under the policy is typically described as an “occurrence.” What constitutes an “occurrence” under the policy is typically spelled out in the definitions or glossary section of the policy. |
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Westport Insurance Corporation v. Appleton Papers, Inc |
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Written by Dru Shields
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Westport Insurance Corporation v. Appleton Papers, Inc. [i] Decision Adopts Vertical Exhaustion Theory, Clarifies Plastics Engineering Justin Gifford, JD PolicyFind General Counsel Early this month, the Wisconsin Court of Appeals District 1 affirmed a trial court’s ruling that vertical exhaustion was the appropriate theory to apply in progressive injury cases and elaborated upon the Wisconsin Supreme Court’s 2009 holding in Plastics Engineering Co. V. Liberty Mutual Insurance Co.[ii] that Wisconsin is an “all sums” allocation state. What does that mean and what impact does it have on insureds faced with environmental claims? Simply, where an insured has several different insurers and levels of coverage (such as primary general commercial liability and “umbrella” or excess coverage) over a period of years, the insured can pick which policy year during a coverage period and, “work its way up the coverage ‘tower’ for that year before moving to another year.[iii]” In comparison to horizontal exhaustion, in which all affected primary policies have to be exhausted before excess policies are triggered, the Westport[iv] court’s adoption of vertical exhaustion will allow insureds who have had property damage during multiple policy years the ability to avoid insolvent primary policy period carriers and ensure attachment of the excess carriers. |
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Second District California Court of Appeal’s Rulings on Equitable Contribution Relax Notice Requirements to Trigger Cost Sharing Obligations, Use Allocation Agreements to Determine Payments Exceed “Fair Share” |
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Written by David ONeill
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By David A. O’Neill, J.D., Director of Investigations, PolicyFind Within the last twelve months, the Second District California Court of Appeal has been busy clarifying the cost-sharing obligations of insurers , who in defending against long-tail claims, seek to bring their policyholder’s other insurers into the fray. The Second District California Court of Appeal ruled last summer in One Beacon America Insurance Co. v. Fireman’s Fund Insurance Company (2009) 175 Cal. App. 4th 183, that an insurer’s obligation of equitable contribution for defense costs arose where, after notice of litigation, a diligent inquiry by the insurer would have revealed the potential exposure to a claim for equitable contribution. This spring, the Second District once again weighed in on the duties of multiple insurers toward one another in defending a common insured against these types of claims. In Scottsdale Insurance Company v. Century Surety Company (2010) 182 Cal. App. 4th 1023, the Court held that an insurer seeking equitable contribution has the burden of proving that it paid more than its “fair share” of defense costs and can only recover from other insurers that which it paid in excess of its “fair share.” |
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California Supreme Court Decision Expected In District Court Conflict Over “Stacking of Policy Limits” in Progressive Property Damage Cases |
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Written by David ONeill
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Director of Investigations
PolicyFind The issue of whether it is legal in California to “stack” policy limits to determine the amount of recovery to which an insured is entitled in a continuous and progressive property damage claim scenario is once again the million dollar question of unsettled California insurance coverage law. The California Supreme Court has previously defined “stacking” as “the ability of the insured, when covered by more than one policy, to obtain benefits from a second policy on the same claim when recovery from the first policy would alone be inadequate to compensate for the actual damages suffered.” The question of whether the “stacking” of policy limits would be allowed in California had been settled it seemed, until recent events have proven otherwise. Last year, when the Fourth District of California Court of Appeals allowed the “stacking” of the limits of all applicable policies across all applicable policy periods in a continuous and progressive property damage case styled State v. Continental Casualty Insurance Company, 170 Cal. App. 4th 160, it determined that the Sixth District’s FMC v. Plaisted & Companies, 61 Cal. App. 4th 1132 had been wrongly decided. The Fourth District attacked the reasoning behind FMC’s long-standing “no-stacking” ruling and set the stage for a show down in the California Supreme Court. |
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U.S. Circuit Court Finds Limits to Indiana’s Kiger Decision In Federated’s Unambiguous Policy Language |
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Written by David ONeill
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By David A. O’Neill, J.D.
Director of Investigations
Policy Find The question of how broadly the Indiana Supreme Court’s ruling in American States Insurance Company v. Kiger, 662 N.E. 2d 945 (Ind. 1996) can be interpreted was further decided on March 25, 2010 when the United States Court of Appeals, Seventh Circuit reached a decision in the West Bend Mutual Insurance Company v. U.S. Fidelity and Guaranty Company case. The original Kiger ruling enabled insured parties to avail themselves of a defense against environmental claims after insurance carriers started using Absolute Pollution Exclusionary language in their policies (roughly post 1985-1986) because the Supreme Court ruled that Pollution Exclusion was ambiguous. This appellate decision is a caution to those owners and operators of retail gasoline service stations, who have been waiting to have their properties tested for pollutants in reliance on the effect of the Kiger ruling. They will now be carefully reviewing the pollution exclusionary and definitions clauses in their policies to determine whether the Kiger or West Bend rules apply to their situations. In its published opinion, the Seventh Circuit explained its decision to affirm the U.S. District Court’s interpretation of a Federated Mutual Insurance Company umbrella liability policy which had been found to exclude coverage for pollution of neighboring property occasioned by leaking underground gasoline storage tanks. |
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As Lumbermens Mutual Liquidation Looms, Dry Cleaners Will Scramble to Find Old Policies
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Written by David ONeill
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Time is running out for dry cleaners who purchased their business insurance policies from subsidiaries of the Kemper Insurance Company in the 1970’s and 1980’s. While many state courts have ruled that the qualified pollution exclusions in these vintage general liability policies will respond to property damage claims occasioned by solvent spills, dry cleaners who have not yet filed claims may soon find that the value of these policies has dramatically diminished. The Kemper Insurance Company, whose lead insurance unit, Lumbermens Mutual Casualty Company was the insurer of choice for tens of thousands of dry cleaners during the 1970’s and 1980’s, is reportedly soon to be placed in liquidation by the Illinois Department of Insurance. Kemper has been in what has been referred to as “voluntary run off” since 2004. Now however, with Lumbermens Mutual’s surpluses nearing depletion, insurance industry insiders expect that the Illinois Department of Insurance will be overseeing a “run-off” of Kemper’s assets, perhaps as soon as this summer. |
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