Hunton Insurance Recovery Blog

While liability for PFAS—Per- and Polyfluoroalkyl Substances, also known as “forever chemicals”—may be an emerging issue, the availability of insurance coverage for these and similar liability claims is not. “Commercial general liability,” or CGL, insurance was specifically designed to cover claims made by a company’s customers or customers of customers for resulting bodily injury and property damage. PFAS claims fit this bill. 

Though insurance companies have attempted to deflect from this intentionally broad coverage, CGL exclusions traditionally have been narrow. Even “pollution exclusions,” which have been raised by insurers facing PFAS claims, have limited scope. PFAS are products; and, thus, when drafting pollution exclusions, the insurance industry represented to regulators that they should apply only when (1) insurers can prove the policyholder expected or intended the alleged injuries and (2) only to true “industrial” pollution. 

Hunton & Williams insurance partner Syed Ahmad commented in a July 19, 2017, Law360 article concerning the Second Circuit Court of Appeals’ recent decision in Olin Corp. v. OneBeacon America Insurance. In the decision, which is the subject of a July 26, 2017, Hunton blog post, the Second Circuit agreed with Olin that its payments toward remediating contamination at five manufacturing sites implicated a series of excess policies issued by Lamorak Insurance Co., formerly OneBeacon.

The ruling adopted the principles articulated by New York’s highest court, the Court of Appeals ...

Last week, the Second Circuit remanded environmental coverage litigation between Olin Corporation and OneBeacon based on its conclusions that (1) all sums allocation applied and (2) a prior insurance provision allowed OneBeacon the opportunity to show that prior excess insurers had made payments for the same claims, thereby reducing OneBeacon’s liability for Olin’s remediation costs at five manufacturing sites.

The district court had calculated OneBeacon’s liability on a pro rata allocation. Based on the New York Court of Appeals’ intervening decision in Viking Pump (previously covered here, the Second Circuit found that an all sums allocation should apply. The decision thus allows Olin to obtain full indemnification under OneBeacon’s policy for amounts spent to remediate the manufacturing sites, up to the limits of that policy. Because the district court had applied a pro rata allocation based on pre-Viking Pump case law, the Second Circuit remanded for the district court to recalculate damages.

On November 9, 2016, my colleagues Syed Ahmad, Shawn Regan and Shannon Shaw, published an article in Corporate Counsel discussing a recent decision from New York’s highest court that may impact the exchange of information between policyholders and their insurers. The article addresses the impact of Ambac Assurance v. Countrywide Home Loans, in which the New York Court of Appeals held that an attorney-client communication disclosed to a third party during the period between the signing and closing of a merger will remain privileged only if the communication relates to a common ...

A federal appeals court ruled on Wednesday that the absence of a duty to defend does not foreclose the potential for indemnity coverage under primary and umbrella liability policies. The decision in Hartford Casualty Insurance Co. et al. v. DP Engineering LLC, stems from a March 31, 2013, incident where an industrial crane collapsed at a nuclear generating facility near Russellville, Arkansas, causing significant damage and injuries, including one death.

Two of three of Rapid-American Corp.'s excess liability insurers do not have to respond to underlying asbestos claims unless and until all underlying coverage is exhausted by the payment of claims, says Judge Bernstein of the United States Bankruptcy Court for the Southern District of New York in a June 7, 2016 decision. Rapid-American has been involved in asbestos litigation since 1974 and settled disputes with many of its underlying insurers, but an amount sufficient to reach its excess coverage policies has not yet been paid. Rapid-American argued that it was not necessary for the primary policies' underlying limits to be exhausted by actual payment before insurers' excess liability coverage attaches.

On May 27, 2016, the U.S. District Court for the Western District of Washington allowed a declaratory judgment action filed by the Seattle Times Company for excess coverage to proceed to trial despite the insurer's arguments that the underlying policies had not been exhausted.

As a follow-up to my post yesterday concerning the New York Court of Appeals' decision in In the Matter of Viking Pump, Inc. and Warren Pumps, LLC, Insurance Appeals, where the New York high court confirmed that policyholders may allocate all amounts of loss to a single policy and a single policy year, Syed Ahmad, a partner in our Insurance Coverage Counseling and Litigation team, was interviewed by Law360 about the decision's broad-ranging implications. As Mr. Ahmad explained in an article appearing today in Law360, titled NY Allocation Ruling Speeds Policyholders' Road To ...

On Tuesday, May 3, 2016, the New York Court of Appeals held that each of several excess liability insurers can be wholly responsible for the entire extent of their policyholders' asbestos liabilities.  The Court further held that "vertical" exhaustion would apply; rejecting the insurers' attempt to apply "horizontal" exhaustion before upper-layer policies must respond.  The decision, in In the Matter of Viking Pump, Inc. and Warren Pumps, LLC, Insurance Appeals, comes in response to two questions certified from the Delaware Supreme Court:

As the New York Times recently reported, Bill Cosby joins the ranks of celebrity homeowners who have tapped defense coverage under their ordinary homeowner’s insurance. Others who paved the way include Roger Clemens, O.J. Simpson, and Bill Clinton. Each had “enhanced personal injury clauses” buried in the fine print of their policies that can provide a defense against lawsuits.¹ Bill Cosby has such a policy, and a federal court in California recently denied American International Group’s (“A.I.G.”) request to allow A.I.G. to immediately appeal an earlier decision which held that a “sexual misconduct” exclusion in Mr. Cosby’s homeowner’s policy did not limit this coverage and that A.I.G., therefore, owed a duty to defend Mr. Cosby against a lawsuit brought in California state court by Janice Dickinson (“Dickinson action”).² In denying A.I.G.’s request for an interim appeal, the court determined that it would be more efficient for the Ninth Circuit to “analyze all exclusions of the policy at the same time.”³

With nearly 2000 locations, the recent outbreaks linked to Chipotle restaurants involving three strains of E. coli, norovirus and Salmonella, have had a substantial impact on the fast-food chain’s supply chain.  In a recent article appearing in Risk Management Magazine, The Chipotle Outbreaks Highlight the Risks of Supply Chain Failures, Syed comments on the insurance issues that are likely to arise, and the ways those issues might be affected by the post-event conduct of affected companies.

Hunton & Williams LLP attorneys Mike Levine and Matt McLellan, along with Tim Monahan of Lockton Companies, LLC., presented to a group of risk managers and insurance professionals on Wednesday evening, February 17^th, about strategies and pitfalls in the claim presentation process. The event was well-attended and the audience was lively with questions for the presenters. A copy of the PowerPoint can be downloaded here. Key points discussed with the group include:

A federal court in New York has held that an insurer carries the burden of demonstrating which, if any, defense costs should be allocated to the defense of non-covered entities. High Point Design, LLC v. LM Ins. Co., No. 14-cv-7878, 2016 WL 426594 (S.D.N.Y. Feb. 3, 2016). The court ruled that once the policyholder established that amounts were spent defending covered claims, the burden shifts to the insurer to show that certain of those amounts resulted from the defense of other claims against non-covered entities. To meet that burden, the insurer was required to show that the relevant costs would not have been incurred but for the non-covered claims.