Enforcing CGL Policyholder’s
Coverage Rights
May 16, 2005
David T. Case
1800 Massachusetts Avenue, N.W.
Second Floor
Washington, D.C. 20036
www.klng.com
Sources of Risk
1. CERCLA
2. RCRA
3. Clean Water Act
4. State Action
5. Private Plaintiffs (Toxic Tort)
6. Other
2
Sources of Coverage
1. Comprehensive General Liability Insurance
2. First Party Insurance
3. Pollution Liability Insurance
4. Clean Up/Cost Cap Insurance
5. Contractors Pollution Liability Insurance
3
Basic Concepts
•
Liability Insurance v. Property Insurance
•
Occurrence Policies v. Claims Made Policies
•
Coverage Grant
•
Defenses
•
Exclusions
4
Scope of Coverage
Basic insuring agreement (1973 standard ISO provision):
“The Company will pay on behalf of the insured all sums which the
insured shall become legally obligated to pay as damages because of
(A) bodily injury or
(B) property damage
to which this insurance applies, caused by an occurrence, and the
company shall have the right and duty to defend any suit against the
insured seeking damages on account of such bodily injury or property
damage, even if any of the allegations of the suit are groundless, false or
fraudulent. . . . “
(emphasis added)
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What Constitutes “Property Damage"
Property Damage Is Defined As:
•
1.
Physical injury to or destruction of tangible
property which occurs during the policy period,
including the loss of use thereof at any time
resulting therefrom, or
2.
Loss of use of tangible property which has not been
physically injured or destroyed provided such loss
of use is caused by an occurrence during the policy
period.
Facts Relevant to Property Damage
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What Constitutes “Bodily Injury”?
“Bodily injury” is defined as “bodily injury,
sickness or disease sustained by any person which
occurs during the policy period, including death at
any time resulting therefore.”
•Facts Relevant to Bodily Injury
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Trigger Theories
•
Exposure trigger
•
Manifestation trigger
•
Continuous trigger
•
“Injury-in-Fact” trigger
Facts Relevant to Trigger
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THE “EXPECTED OR INTENDED”
DEFENSE
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The “Expected or Intended” Defense
An “occurrence” is an “accident, including continuous
or repeated exposure to conditions, which results,
during the policy period, in bodily injury or property
damage neither expected nor intended from the
standpoint of the insured.” (emphasis added)
•
Objective Standard – Minority Test
•
Subjective Standard – Majority Test
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The “Expected or Intended” Defense
Fact-Intensive Defense to Coverage
• Costly to Prove
•
Costly to Defend
Very Difficult to Prevail on Summary Judgment
This Often is “The Issue” at Trial
Facts Relevant to Expected or Intended
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(cont’d)
Pollution Exclusion
The Pollution Exclusion
Coverage is excluded for:
Bodily injury or property damage arising out of the
discharge, dispersal, release or escape of smoke, vapors,
soot, fumes, acids, alkalis, toxic chemicals, liquids or
gases, waste materials or other irritants, contaminants or
pollutants into or upon land, the atmosphere, or any
watercourse or body of water; but this exclusion does not
apply if such discharge, dispersal, release or escape is
sudden or accidental. (1973 ISO version).
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Pollution Exclusion
(cont’d)
•
When is the pollution exclusion applicable?
•
What is the relevant discharge?
•
What are the relevant facts?
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What To Do?
I.
Policyholder
A. Provide Notice
B. Consult With Counsel
II.
Counsel
A. Policy Analysis
B. Facts
C. Consult With Experts
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