Category Archives: Insurance

AIG Bows Out of the Pollution Legal Liability Market

On Tuesday, insurance giant AIG announced a major restructuring designed to make it a “more profitable and focused insurer.” Apparently as a result of these efforts to streamline and slim down, AIG has begun notifying holders of itsAIG Pollution Legal Liability insurance that it will no longer be underwriting new policies.  Existing policies will be honored, but renewal will not be available.  AIG will reportedly continue to write Contractors Pollution Liability and Environmental and General Liability Exposure policies.… More

Be Careful With Pollution Insurance Coverage Disclosures – How Conditions Actually Disclosed Were Deemed Not Disclosed

A Massachusetts company learned the hard way that you need to pay close attention to policy endorsements when you negotiate them. In Market Forge Industries, Inc. v. Indian Harbor Insurance Company, the Appeals Court of Massachusetts held, in an unpublished decision, that a Pollution and Remediation Legal Liability Policy did not cover the costs of cleaning up certain pollution because the “Pollution Conditions” were not specifically listed in the “Known Conditions” endorsement.… More

What Triggers Excess Coverage In An Environmental Case: Not Necessarily the Payment of the Full Underlying Policy Limits

More and more excess insurers are taking the position that a policyholder which settles with primary or low level excess insurers for less than the full amount of the policy limits has waived its right to obtain coverage from any of the high level excess insurers.   A Texas appellate court recently rejected this position in Plantation Pipe Line Company v. Highlands Insurance Company in Receivership. … More

Absolute Pollution Exclusions Are Absolute When There Has Been Pollution

Pollution exclusions first became routine in liability policies in the early 1970s.  After a decade of often unsuccessful litigation trying to enforce those exclusions, insurers introduced a so called “absolute” pollution exclusion into their commerical liability policies. Given that the language of absolute pollution exclusions has almost universally been found to be unambiguous, there has been a surprising amount of litigation on the subject.   What emerges from that litigation  is a general rule:  the exclusion will virtually always be enforced where the claim involves contamination of the environment,… More

Is the Absolute Pollution Exclusion Absolute? It Depends on Which State Answers the Question

The battle over the scope of the absolute pollution exclusion in general liability policies continues to be fought in the context of defective drywall manufactured in China.  An earlier blog entry discussed a Virginia court that had concluded that there was no coverage for defective drywall claims, rejecting decisions from a number of states that had ruled that the absolute pollution exclusion should be limited to industrial pollution claims, … More

CERCLA’s Act of War Defense — Potential Collateral Damage

For the first time in CERCLA’s history, a court has concluded that a Superfund claim was barred by the “act of war” defense.  In that case, In Re September 11 Litigation, the judge ruled that a property owner a block from Ground Zero could not recover the costs of cleaning up dust on his building from the collapse of the World Trade Center towers because the dust resulted from an act of war.  … More

Reverse Coverage Suits: What Happens When Policyholders Agree to Defend and Indemnify Their Insurers

Increasingly, when settling coverage disputes,  insurers require policyholders to agree to defend and indemnify the insurer against any additional claims asserted against the insurer.  This produces the curious result that the policyholder and insurer functionally switch places.  For example, Hartford Fire Insurance Company recently sued its policyholder, Lanxess Sybron Chemicals Company.   Lanxess had settled a coverage dispute with Hartford concerning the Kearny Superfund Site in New Jersey.  As part of that settlement,… More

The Proper Reach of Pollution Exclusion Provisions In Insurance Coverage Claims

Most people would likely consider pollution to be a concept that is tied to harm to the environment — contamination of soil, groundwater, or ambient air.  Consistent with this common understanding of pollution, courts have repeatedly rejected the attempt by insurers to expand the scope of pollution exclusion provisions to bar coverage simply because an injury or loss involved the discharge of something that can be characterized as “an irritant or contaminant”. … More

Indemnification Agreements Under CERCLA Do Not Affect Liability to Entities That Are Not Parties to the Agreement

Section 107(e) of CERCLA provides that

No indemnification, hold harmless, or similar agreement or conveyance shall be effective to transfer from the owner or operator of any vessel or facility or from any person who may be liable for a release or threat of release under this section, to any other person the liability imposed under this section. Nothing in this subsection shall bar any agreement to insure,… More

Determining an Occurrence in Environmental Insurance Cases

Like a comet which drags a long trail in its wake, large CERCLA cases in federal court often are accompanied by related insurance coverage cases in state court. That is true with the Lower Fox River Superfund Site in Wisconsin. While a firestorm of litigation has raged for many years in federal court relating to the billion dollar liability for PCB contamination in the Lower Fox River, the key PRP in that litigation – NCR —… More

Rhode Island’s Easily Triggered Duty of An Insurer to Defend Environmental Cases

The First Circuit recently confirmed the traditional rule that it doesn’t take much to trigger an insurer’s duty to defend a policyholder against an environmental claim. In Travelers Casualty and Surety Company v. Providence Washington Insurance Company, the First Circuit overturned the trial court’s conclusion that there could be no coverage for contamination under liability policies issued after a property owner had ceased the activities giving rise to that contamination.… More

The Geneva Association Warns Governments To “Wake Up”: Have They Too Drunk The Koolaid?

Last week, the Geneva Association, which describes itself as “the leading international insurance think tank for strategically important insurance and risk management issues,” issued a report entitled “Extreme events and insurance: 2011 annus horribilis.” Quick take-away? Insurance losses are growing. Why? While there were large earthquakes in 2011, the bigger long-term concerns are extreme weather events and an increasing number of people and resources located in areas subject to such events.… More

Want to Know Why Congress Can’t Pass Climate Legislation? Here’s Your Answer

And you thought that the explanation was just partisan gridlock in Washington? According to a study that has been accepted for publication in Environmental Research Letters, it will be somewhere between 120 years and 550 years before losses caused by Atlantic tropical storms can be statistically attributed to anthropogenic climate change. It’s important to note that this study is not by climate skeptics; nor are the authors opposed to Congressional action. They are simply pointing out that it’s damn hard to attribute causation to specific storms or on short time scales. As they note in their conclusions:

Based on the results from our emergence time scale analysis we urge extreme caution in attributing short term trends (i.e.,… More

Insurance Regulators Vote to Weaken Climate Disclosure Rules

Just over a year ago, we noted the surprising, unanimous decision by the National Association of Insurance Commissioners (NAIC) to adopt rules requiring insurers to publicly disclose the impacts of climate change on their business decisions, to begin May 1, 2010.  Well, not so fast.   As Climate Wire reported, at Sunday’s NAIC meeting, a the commissioners voted 27-22 to make the disclosure rules optional for states to adopt,… More

SEC Reverses Bush Policy on Climate Risk in Shareholder Resolutions

The US Securities and Exchange Commission released a staff bulletin yesterday that reverses a Bush administration policy that excluded shareholder resolutions which asked companies to disclose their climate-related financial exposure. While not the rule-making we discussed last week, this could be a significant change for the boards of large companies who may now be forced to respond to shareholder concerns about the risks that greenhouse gases and climate change can create.… More

Insurance Regulators Unanimously Approve Climate Risk Survey

An update to a development we noted a few weeks ago —  as reported by Climate Wire today, at the national meeting of the National Association of Insurance Commissioners (NAIC) yesterday, regulatory officials from all 50 states, the District of Columbia and five U.S. territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands) unanimously voted in favor of rules requiring insurers to disclose the impacts of climate change on their business decisions. … More

Finally, Some Good News for Coal

Sometimes it seems as though the days for coal are short. With a new administration that seems truly committed to addressing climate change, it can be difficult to envision a long-run future. 

Other days, coal, like Citigroup, seems too big to fail. Today, I’m in the latter camp. Yesterday, Zurich Financial Group announced that it would provide insurance to cover risks associated with carbon capture and sequestration (CCS) projects. It’s one thing for Congress,… More