Wisconsin dry cleaners and their attorneys will want to take note of the recent decision by the Supreme Court of Wisconsin in Plastics Engineering Company v. Liberty Mutual Insurance Company and contact their local insurance archeologist to find their historical business insurance policies. As of January 29, 2009, the potential value of those old business insurance policies to pay for environmental clean ups has greatly increased.
The Supreme Court declared that the all sums method of allocating policy limitswillnow be the law in Wisconsin.The Court ruled that once the policy is triggered, the insurer must fully defend the lawsuit in its entirety and pay all sums up to the policy’s limits. Rejected was the time on the risk policy limit allocation method preferred by Wisconsin courts until now. Time on the risk had limited the value of any single policy to the percentage of the total damages occurring during that policy’s period of effectiveness.
Many Wisconsin dry cleaners had been discouraged from using their historical business insurance policies to pay for environmental clean ups in years pastbecause of the time on the risk allocation method. Also, inearlier years Wisconsin courts had required a law suit to trigger a comprehensive liability policy. A letter from the Wisconsin Dept. of Natural Resources did not suffice to trigger the policies until the Supreme Court’s 2003 ruling in a case styled Johnson Controls, Inc. v. Employers Insurance of Wausau. In Johnson Controls however, the Court decided that a letter from the WDNR was enough to create a duty to defend under the policy.
So those dry cleaners who gave up years ago on using their historical insurance policies to address clean ups need to take a second look. “The times they are a-changing.”