INSURANCE COVERAGE FOR GLOBAL WARMING
LIABILITY CLAIMS
By James S. Malloy and John M. Sylvester1
i. introduction
By now, most of us have heard of the phenomenon called global warming
and the ongoing debate over its effects on the planet. Indeed, former Vice
President Al Gore’s best-selling book and Academy Award–winning documentary, “An Inconvenient Truth,” have made global warming a part of the
popular lexicon. Regardless of one’s beliefs regarding the causes or effects
of global warming,2 the debate has now seemingly shifted to the courtroom
with potentially costly consequences to corporate defendants. In the past,
courts have typically granted preliminary motions to dismiss suits seeking
to impose liability on defendants for damages allegedly caused by global
warming on the grounds that the plaintiffs lacked standing to pursue such
claims and that the regulation of greenhouse gases (GHGs)3 was a nonjusticiable issue. Based on recent developments, however, global warming
litigation may be turning from a mere inconvenience to something more
problematic for companies across a wide array of industries: increased
1. The authors are lawyers in the Pittsburgh office of K&L Gates LLP, a law firm that
regularly represents policyholders in insurance coverage disputes, including global warming–
related claims. The views expressed herein are those of the authors and not necessarily those
of the law firm or its clients. The authors would like to thank John Hagan, John Estep, and
Jon Christman of K&L Gates LLP for their assistance on this article. Portions of this article
were published previously by James Malloy in Insurance Coverage Alert: Insurance Coverage
for Emerging Global Warming Claims, Newsstand (Nov. 18, 2009), www.fmocklaw.com /news
stand / Detail.aspx?publication=6023 (a K&L Gates Internet publication).
2. Recent polls show that “48% of Americans . . . believe that the seriousness of global
warming is generally exaggerated.” See Frank Newport, Americans’ Global Warming Concerns
Continue to Drop, Mar. 11, 2010, www.gallup.com /poll /126560/americans-global-warmingconcerns-continue-drop.aspx.
3. Carbon dioxide is “the principal anthropogenic [GHG] that affects the Earth’s radiative
balance.” U.S. Envtl. Prot. Agency, Glossary of Climate Change Terms, www.epa.gov/
climatechange /glossary.html (last visited July 18, 2010).
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defense costs and potential liability for damages awards. For example, consider the following:
• Two federal appellate court decisions in late 2009 ruled that plaintiffs have
standing to pursue causes of action against corporate defendants that emit
GHGs, seeking to recover damages allegedly caused by global warming.4
• The Supreme Court in Massachusetts v. Environmental Protection Agency recognized that “the harms associated with climate change are serious and
well recognized” and that “EPA [Environmental Protection Agency] does
not dispute the existence of a causal connection between man-made greenhouse gas emissions and global warming.”5
• The Obama administration has dramatically increased the government’s
efforts to regulate climate change–related risks, including capping GHG
emissions.6
These developments, among others, have combined to create an increasingly hostile litigation environment that appears to be on the verge of heating up in courts across the nation for companies that have emitted GHGs,
or continue to do so, as part of their ongoing business operations.
Although insurance coverage for global warming liabilities may have
been an afterthought for defendants because such cases were routinely
dismissed at the preliminary stage, the availability of insurance to cover
defense costs and any potential liability is an important factor to consider
in the defense of these claims. Allegations that GHGs emitted by the defendants contributed to global warming, which in turn caused property
damage or bodily injury to plaintiffs, may be sufficient to trigger general
liability policies.7 Consequently, companies that have been sued regarding
global warming claims may have insurance available to cover some or all of
the costs of these litigations.
This article will focus on the potential issues that policyholders may face
in seeking general liability coverage for global warming claims. Although
many of the coverage issues will turn on the language of the relevant in4. See Connecticut v. Am. Elec. Power Co., 582 F.3d 309 (2d Cir. 2009); Comer v. Murphy
Oil USA, 585 F.3d 855 (5th Cir. 2009) (see Section II.A for recent developments in this appeal).
5. 549 U.S. 497, 521, 523 (2007). The Environmental Protection Agency (EPA) has since
promulgated an endangerment finding related to GHGs that is being challenged in the
courts. See 74 Fed. Reg. 66,496 (Dec. 15, 2009); Robin Bravender, 16 “Endangerment” Lawsuits Filed Against EPA Before Deadline, N.Y. Times, Feb. 17, 2010. The EPA has settled some
of these lawsuits. See Proposed Settlement Agreements, Clean Air Act Citizen Suit, 75 Fed.
Reg. 42,085 ( July 20, 2010).
6. E.g., American Clean Energy and Job Security Act of 2009, H.R. 2454, 111th Cong.
(2009); see House Passes Historic Waxman-Markey Clean Energy Bill, June 28, 2009,
http://energycommerce.house.gov/index.php?option=com_content&view=article&id=1697:
house-passes-historic-waxman-markey-clean-energy-bill&catid=155:statements&Itemid=55.
7. Depending on the nature of the specific claims alleged and the specific parties named as
defendants, other types of liability insurance, such as directors’ and officers’ liability (D&O)
coverage or errors and omissions coverage, may also be implicated by such claims.
Insurance Coverage for Global Warming Liability Claims
813
surance policy, the applicable state law, and the set of facts unique to each
policyholder, this article will provide a broad primer on the key liability insurance issues for companies faced with potential global warming–related
claims. In examining these issues, this article will cover four main topics:
(1) the current state of litigations over global warming claims and insurance coverage for such cases, (2) the duty to defend under general liability
policies, (3) the relevant liability policy language that will most likely be
the focus of coverage disputes over global warming liabilities, and (4) the
current developments by the insurance industry to address climate change
liabilities and the impact those changes might have on the availability of
coverage for such claims under insurance policies issued in the future.
ii. history of global warming litigations
and related insurance coverage disputes
A. The Underlying Global Warming Claims
To date, there have been four reported suits seeking to impose liability for
loss arising from corporate defendants’ GHG emissions’ alleged contribution to global warming:
Comer v. Murphy Oil USA, Case No. 1:05-cv-00436-LTS-RHW (S.D.
Miss. Aug. 30, 2007)
This putative class action was filed by residents and owners of property
in the Mississippi Gulf Coast against oil and coal companies.8 Plaintiffs
alleged that defendants’ industrial operations and GHG emissions contributed to global warming, “in turn caus[ing] a rise in sea levels and add[ing]
to the ferocity of Hurricane Katrina,” which allegedly destroyed or caused
severe damage to plaintiffs’ property.9 Plaintiffs alleged a number of claims
based on state common law theories, including public and private nuisance,
trespass, negligence, unjust enrichment, fraudulent misrepresentation, and
civil conspiracy and sought monetary damages.10 Defendants moved to dismiss plaintiffs’ complaint on the grounds of lack of standing to assert their
claims and that the claims involved nonjusticiable political questions.11
The district court, in ruling from the bench, dismissed the complaint on
the grounds that it presented a political question.12
Plaintiffs timely appealed to the U.S. Court of Appeals for the Fifth Circuit, which reversed the district court on October 16, 2009, and reinstated
8. Comer, 585 F.3d at 859–60.
9. Id. at 860–61.
10. Id. at 859; see also Third Amended Class Action Complaint ¶¶ 28–41, Comer v. Murphy Oil USA, No. 1:05-cv-00436-LTS-RHW (S.D. Miss. Apr. 19, 2006).
11. Comer, 585 F.3d at 860.
12. Id. at 860 n.2.
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the nuisance, trespass, and negligence claims on the grounds that plaintiffs did have standing to assert those claims and that those claims did not
involve nonjusticiable political questions.13 Defendants filed a motion for
reargument en banc, which was granted by the Fifth Circuit, thereby vacating the October 16, 2009, panel decision.14 On May 28, 2010, the Fifth
Circuit dismissed the appeal because the court could not obtain a quorum
for an en banc hearing due to recusal issues.15 The court’s decision to vacate the appeal rather than reinstate the panel decision thereby restores the
trial court’s dismissal.16 Plaintiffs’ remaining redress is a certiorari petition
to the Supreme Court. The strange procedural turn of events in the Fifth
Circuit is sure to lead plaintiffs to explore this option.
Connecticut v. American Electric Power Co., Inc., Docket Nos.
05-5104-cv, 05-5119-cv (S.D.N.Y. 2005)17
Eight states, the City of New York, and three private land trusts sued six
power company defendants that own and operate fossil fuel power plants
in twenty states, seeking injunctive relief to abate defendants’ GHG emissions that allegedly contribute to the public nuisance of global warming.18
Defendants moved to dismiss on the grounds, inter alia, of a nonjusticiable
political question and that plaintiffs lacked standing to sue.19 The district
court dismissed the complaints, holding that plaintiffs’ claims presented
a nonjusticiable political question.20 The U.S. Court of Appeals for the
Second Circuit disagreed and reversed the district court on September 21,
2009, holding that the complaints did not present a political question and
plaintiffs had standing to sue.21 Defendants moved for a reargument en
banc, which was denied on March 5, 2010.22 Defendants have filed a petition for writ of certiorari asking the Supreme Court to hear their appeal.
Native Village of Kivalina v. ExxonMobil Corp., Civ. Action No. CV 08
1138 (N.D. Cal. 2009)
The community of Kivalina, Alaska, brought suit against energy, oil,
and utility companies, claiming that global warming is destroying Kivalina
13. Id. at 879–80.
14. See Comer v. Murphy Oil USA, 598 F.3d 208 (5th Cir. 2010).
15. See Comer v. Murphy Oil USA, 607 F.3d 1049 (5th Cir. 2010).
16. Id. at 1055.
17. This case was consolidated with Open Space Institute, Inc. v. American Electric Power Co.,
Inc., Civ. Action No. 1:04-cv-05670-LAP (2005), which was filed on the same day in the same
court. See Connecticut v. Am. Elec. Power Co., 582 F.3d 309, 316–19 (2d Cir. 2009).
18. Am. Elec. Power, 582 F.3d at 316–19.
19. Id. at 319.
20. Connecticut v. Am. Elec. Power Co., 406 F. Supp. 2d 265 (S.D.N.Y. 2005).
21. Am. Elec. Power, 582 F.3d at 392–93.
22. See Order, Connecticut v. Am. Elec. Power Co., No. 05-5104-cv (2d Cir. Mar. 5,
2010).
Insurance Coverage for Global Warming Liability Claims
815
because it is melting the Arctic sea ice that protects the village from winter
storms and erosion.23 Kivalina alleged that “houses and buildings are in imminent danger of falling into the sea” when “battered by storms” and when
ground underneath it has crumbled and that if the entire village is not
relocated, at a cost of hundreds of millions of dollars, it will be destroyed.24
Kivalina asserted claims of common law nuisance and civil conspiracy and
sought monetary damages for defendants’ past and ongoing contributions
to global warming.25 Defendants moved to dismiss the complaint on the
grounds, among others, that it involved a political question. The district
court agreed and dismissed plaintiffs’ claims. In doing so, the court distinguished the recent appellate decision in American Electric Power.26 Plaintiffs
appealed to the U.S. Court of Appeals for the Ninth Circuit and filed their
opening brief in March 2010. The appellees filed their briefs at the end of
June 2010.
California v. General Motors Corp., Civ. Action No. 3:06-cv-05755-MJJ
(N.D. Cal. 2006)
The State of California sued various automobile manufacturers, seeking
damages for the automakers’ contributions to global warming, which the
complaint alleged were over 20 percent of the human-generated carbon dioxide emissions in the United States and over 30 percent of such emissions
in California. California sought to hold defendants jointly and severally liable for creating, contributing to, and maintaining a public nuisance under
federal and state law. Defendants moved to dismiss the complaint on the
grounds, inter alia, that it raised a nonjusticiable political question.27 The
district court agreed and dismissed the case in September 2007.28 California appealed the decision to the Ninth Circuit but subsequently withdrew
its appeal in June 2009.29
If plaintiffs in Comer seek a writ of certiorari, as is expected, then the
remaining global warming claims will all still be in various stages of the
appeals process. Whether the Ninth Circuit in Kivalina follows the prior
decisions of the Second Circuit in American Electric Power and the panel
decision of the Fifth Circuit in Comer could influence whether the U.S.
23. Native Vill. of Kivalina v. ExxonMobil Corp., 663 F. Supp. 2d 863, 868–69 (N.D. Cal.
2009).
24. Id.
25. Id. at 869.
26. Id. at 883.
27. California v. Gen. Motors Corp., No. C06-05755 MJJ, 2007 WL 2726871, at *2 (N.D.
Cal. 2007).
28. Id. at *17.
29. See Order, California v. Gen. Motors Corp., No. 07-16908 (9th Cir. June 24, 2009),
available at www.globalclimatelaw.com /uploads /file /California%20v%20GM%20dismissal.
pdf.
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Tort Trial & Insurance Practice Law Journal, Spring/Summer 2010 (45:3-4)
Supreme Court decides to hear any further appeals on the issue. If the
Kivalina claim is reinstated by the Ninth Circuit, then there would be an
agreement among the circuits (notwithstanding the en banc opinion in
Comer) that the global warming claims should proceed in the trial courts in
the very near future.
B. Coverage Litigation Regarding Global Warming Liabilities
As of September 2010, there has only been one reported litigation regarding insurance coverage for the types of allegations in these four suits. In
Steadfast Insurance Co. v. AES Corp., the insurer, Steadfast, filed suit against
the policyholder, AES, seeking declaratory relief that the allegations of the
Kivalina claim were not covered under the commercial general liability
(CGL) policies that Steadfast had issued to AES during the period 2003 to
2008.30 Steadfast raised three arguments as to why the Kivalina claim was
not covered: (1) the complaint does not allege property damage caused by
an “occurrence,” (2) the loss at issue was a loss in progress, and (3) the pollution exclusion bars coverage.31 Steadfast moved for summary judgment
in March 2009, which the court denied in October 2009, holding that
questions of fact existed as to the allegations of negligence versus intentional conduct, the definition of pollutant, and the parties’ intent at the time
of contract formation.32 AES then moved for summary judgment on the
grounds that the complaint alleged an occurrence, i.e., property damage
due to negligence, and that because the Kivalina claim had been dismissed
by this time, Steadfast’s request for declaratory judgment on its indemnity
obligation was moot and should be dismissed. Steadfast cross-moved for
summary judgment in response. On February 5, 2010, the court entered
an order declaring that Steadfast had no duty to defend AES in Kivalina
because the complaint did not allege an occurrence as that term was defined in the Steadfast policies.33 The order gives no further detail on the
ruling and does not address the pollution exclusion or loss-in-progress arguments. AES has appealed the trial court’s decision to the Supreme Court
of Virginia, which granted the petition for appeal on August 2, 2010.34
In sum, global warming litigation, and especially disputes over insurance
coverage for such liabilities, is in its infancy. Whether these claims develop
into a burgeoning area of liability for companies or, alternatively, fall by
30. See Complaint for Declaratory Relief ¶ 5, Steadfast Ins. Co. v. AES Corp., No. 2008858 (Arlington County, Va. Cir. Ct. July 9, 2008).
31. Id. at 9–12.
32. Steadfast Ins. Co. v. AES Corp., No. 2008-858, 2009 WL 5242863, at *1 (Va. Cir. Ct.
Dec. 3, 2009).
33. Steadfast Ins. Co. v. AES Corp., No. 2008-858, 2010 WL 1484811, at *1 (Va. Cir. Ct.,
Feb. 5, 2010).
34. AES Corp. v. Steadfast Ins. Co., Case No. 1000764 (Aug. 2, 2010), available at Virginia
Courts Case Information, http://208.210.219.132/scolar/precaseinq.jsp;jsessionid=0000M
ET3RRSOVYAY05DEAMSTCPQ:ulnfn1uq (last visited Aug. 10, 2010).
Insurance Coverage for Global Warming Liability Claims
817
the wayside is yet to be determined and could be decided largely by how
the appeals in Comer, Kivalina, and American Electric Power are ultimately
resolved in the coming months. Even if the lawsuits proceed, plaintiffs will
still have some major hurdles to clear, not the least of which is proving
causation. Nevertheless, it is against this backdrop that this article will examine the potential issues that policyholders may face in seeking liability
insurance coverage for the cost of defending global warming claims and
any liability that may arise from such claims.
iii. coverage for defense costs: potentially valuable
asset for global warming defendants
A. Duty to Defend
No court has yet imposed liability on a defendant for damages allegedly
caused by GHG emissions’ contribution to global warming, but that has
not saved defendants from incurring legal fees in defending such claims.
Those fees are likely to become more significant now that at least one
appellate court has upheld its ruling that plaintiffs do have standing to
pursue global warming liability and, further, that the issue is justiciable.
Policyholders are not without recourse, though. A defendant company’s
general liability insurance policy may provide coverage for such defense
costs. Specifically, primary liability insurance policies often impose on the
insurer a duty to defend the policyholder from any claims that arguably
may fall within the scope of the policies’ coverage terms.35 It is generally
recognized that an insurer’s duty to defend is broader than its duty to indemnify.36 Thus, an insurer may be required to defend an action for which
it ultimately may not be required to indemnify the insured.37 The duty to
defend is generally triggered by the tender of a claim that is potentially
covered under the policy, which is determined, at the outset, by the allegations of the complaint.38
The basic allegations of the global warming claims to date may be sufficient to trigger an insurer’s duty to defend. Plaintiffs have asserted numerous causes of action, including negligence, trespass, and nuisance, seeking
35. Similarly, umbrella and excess policies often impose on the insurer an obligation to
reimburse the policyholder for its legal fees and costs in defending a claim.
36. Intex Plastics Sales Co. v. United Nat’l Ins. Co., 23 F.3d 254, 256 (9th Cir. 1994);
Burroughs Wellcome Co. v. Commercial Union Ins. Co., 632 F. Supp. 1213, 1218 (S.D.N.Y.
1986); First Ins. Co. of Haw., Inc. v. Minami, 665 P.2d 648 (Haw. 1983); Conway v. Country
Cas. Ins. Co., 442 N.E.2d 245, 247 (Ill. 1982); Westchester Fire Ins. Co. v. G. Heileman
Brewing Co., 747 N.E.2d 955, 964 (Ill. App. Ct. 2001); D’Auria v. Zurich Ins. Co., 507 A.2d
857, 859 (Pa. Super. Ct. 1986); Fire Ins. Exch. v. Estate of Therkelsen, 27 P.3d 555, 560 (Utah
2001); see also 1 Peter J. Kalis et al., Policyholder’s Guide to the Law of Insurance
Coverage § 4.02, at 5 (Supp. 2007).
37. Kalis et al., supra note 36, § 4.02, at 5.
38. Id. § 4.03, at 5–6.
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Tort Trial & Insurance Practice Law Journal, Spring/Summer 2010 (45:3-4)
damages for property damage and bodily injury. As discussed more fully
below, these allegations should be sufficient to trigger coverage or, at a
minimum, the duty to defend the policyholder in the global warming litigations.39 Most courts will impose a duty to defend on an insurer as long
as one basis of potential liability in a multicount complaint would be covered.40 Thus, the insurer typically must provide a defense to the policyholder until such time as the insurer proves that the entire claim is outside
the scope of coverage.41 Any doubts regarding whether the duty to defend
is triggered will be resolved in favor of the policyholder receiving a defense
from the insurer.42 As a result, a liability policy’s defense duty may provide
coverage for all or part of a company’s defense costs, including expert fees,
incurred in defending global warming claims. This could prove to be a very
valuable asset to a defendant in these litigations, which may involve very
complex discovery and litigation processes due to the circuitous causation
and proof issues in dispute.
B. Notice to Insurers
In an effort to preserve a policyholder’s right to a defense and indemnity, the
policyholder may be well advised to give notice of a global warming claim
to its insurer(s). Most policies have specific procedures and conditions for
reporting a claim, which may incorporate time deadlines and other specific
requirements. Insurers will likely argue that failure to comply strictly with
such procedural requirements for notice precludes coverage for an otherwise
covered claim. Thus, a policyholder should be mindful of all of the provisions and conditions in its policies, including any stated condition to provide
timely notice and to cooperate with the insurer in the defense of the action.
39. See Travelers Indem. Co. v. Summit Corp. of Am., 715 N.E.2d 926, 937 (Ind. Ct. App.
1999) (finding that nuisance and trespass claims were covered claims); Atl. Cement Co. v. Fid.
Cas. Co. of N.Y., 459 N.Y.S.2d 425, 428 (App. Div. 1983) (holding that nuisance claim was
an occurrence under policy).
40. See, e.g., Health Care Indus. Liab. Ins. Program v. Momence Meadows Nursing Ctr.,
Inc., 566 F.3d 689, 694 (7th Cir. 2009); Fair Operating, Inc. v. Mid-Continent Cas. Co., 193
F. App’x 302, 306 (5th Cir. 2006); Traders State Bank v. U.S. Fid. & Guar. Co., No. 91-35764,
1992 U.S. App. LEXIS 28087, at *5 (9th Cir. Oct. 26, 1992); Providence Hosp. v. Rollins
Burdick Hunter, Inc., No. 92 C 8096, 1993 U.S. Dist. LEXIS 9873, at *9–10 (N.D. Ill. July
20, 1993); Potomac Ins. Co. of Ill. v. Corporate Interiors, Inc., No. 01C-01-54, 2001 Del.
Super. LEXIS 430, at *8 (Super. Ct. Nov. 1, 2001).
41. See, e.g., Wimberly Allison Tong & Goo, Inc. v. Travelers Prop. Cas. Co., No. 08-2976,
2009 U.S. App. LEXIS 25294, at *11 (3d Cir. Nov. 18, 2009); City of Sandusky v. Coregis
Ins. Co., 192 F. App’x 355, 361 (6th Cir. 2006); Scottsdale Ins. Co. v. MV Transp., 115 P.3d
460, 466 (Cal. 2005); Conduit & Found. Corp. v. Hartford Cas. Ins. Co., 746 A.2d 1053, 1061
(N.J. Super. Ct. App. Div. 2000).
42. See, e.g., Ferro Corp. v. Cookson Group, PLC, 585 F.3d 946, 951 (6th Cir. 2009);
Indian Harbor Ins. Co. v. Valley Forge Ins. Group, 535 F.3d 359, 363 (5th Cir. 2008); Danby
of N. Am., Inc. v. Travelers Ins. Co., 25 F. App’x 186, 190–91 (4th Cir. 2002); RAD Source
Techs., Inc. v. Essex Ins. Co., 902 So. 2d 264, 265 (Fla. Dist. Ct. App. 2005).
Insurance Coverage for Global Warming Liability Claims
819
A policyholder should consider providing notice and seeking coverage
under every policy that possibly may be triggered by the factual allegations
of the given lawsuit (e.g., time period of the alleged injury or damage at
issue) and the amount of potential damages sought (e.g., the amount of
potential damages exceeds the limits of the policyholder’s primary policies
and therefore implicates excess layers of coverage). To determine which
particular insurance policies may provide coverage for a claim, both the
policyholder’s current liability insurance program, including excess coverage, as well as historical liability policies should be reviewed. As discussed
in more detail below, many historical general liability policies were written
on an occurrence basis and could provide coverage if the plaintiff’s claim
alleges property damage taking place during a long-since-expired policy
period, regardless of when the claim is subsequently asserted. As such, it
is important for a policyholder to conduct a detailed review of the allegations in the complaint for the purpose of notifying any and all potential
insurers.
iv. potential coverage issues for global warming
liabilities under cgl policies
Determining whether a general liability policy ultimately will indemnify a
policyholder for damages imposed in a global warming claim requires an
analysis of a host of issues, including the following:
(1) Which policies are potentially triggered by a given claim?
(2) Do the global warming claims seek to impose damages for property damage or bodily injury?
(3) Are the alleged damages caused by global warming and GHG emissions
“fortuitous”?
(4) Will pollution exclusions operate to bar coverage for global warming
claims?
How those questions are resolved by courts in the future will dictate the
course of insurance coverage for global warming claims.
A. Triggering Current and Historical Policies
1. Claims-Made Policies
Many commercial liability policies currently in effect are written on a
“claims-made” basis, meaning that they provide coverage for claims made
against the policyholder during the policy period of the insurance policy.43 Therefore, a policyholder that is sued for alleged injury arising from
43. Some policies also require that in addition to the claim being asserted during the policy
period, notice of the claim must be reported to the insurer during that period.
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Tort Trial & Insurance Practice Law Journal, Spring/Summer 2010 (45:3-4)
GHG emissions may seek coverage under the claims-made policy on the
risk when the claim is asserted against the policyholder even if the alleged
damage predated the policy period. Some claims-made policies, however,
may contain a retroactive date, which states that the claim must be based
on acts or damage occurring after a specified date. The retroactive date
could be a key policy provision in analyzing coverage for global warming
liabilities under claims-made policies because the underlying complaints
allege acts and damages over several decades leading up to the claim. Depending on the timing of the retroactive date, the acts and damages may
have occurred entirely before or after the date. Although the retroactive
date will not be an issue in the latter situation, the policyholder will have to
rebut the argument that the retroactive date bars coverage in the former.
In cases in which the wrongful acts and damages have spanned time frames
both before and after the retroactive date, policyholders have been successful in obtaining coverage for some or all of the claim, but the courts have
not been unanimous on the issue.44
2. Occurrence-Based Policies
Depending on the factual allegations of the complaint, the policyholder
may also be able to obtain coverage from its current and /or historical occurrence-based liability policies. Under occurrence-based policies, a claim
may be covered if some part of the alleged property damage or bodily injury
occurs during the policy period regardless of when the claim is asserted.
Thus, if the underlying plaintiff alleges that the policyholder’s GHG emissions have caused property damage over the last thirty years, the policyholder may be able to seek coverage from every occurrence-based policy
in effect from the late 1970s through the date of the last such policy, based
on the argument that property damage allegedly had occurred in each of
those policy periods.
Two main issues will impact a policyholder’s ability to access historical
insurance coverage: (1) the allegations of the underlying complaint and
(2) the governing jurisdiction’s law regarding trigger of coverage. With
regard to the allegations in the underlying complaint, examples from the
global warming complaints to date give policyholders a reasonable argument that historical occurrence-based policies are triggered by these current claims because the alleged damage caused by GHG emissions has
been ongoing for decades. For example, in Kivalina, plaintiffs alleged that
44. Compare Spinx Oil Co. v. Federated Mut. Ins. Co., 427 S.E.2d 649, 650–51 (S.C. 1993)
(finding coverage where pollution seepage began prior to retroactive date but was not discovered until after), with Evans v. Med. Inter-Ins. Exch., 856 A.2d 609, 615 (D.C. 2004)
(holding that medical malpractice policy did not provide coverage for injuries resulting from
pre-retroactive date surgery irrespective of fact that injuries did not fully develop until after
retroactive date).
Insurance Coverage for Global Warming Liability Claims
821
“[a]ll Defendants directly emit large quantities of greenhouse gases and
have done so for many years.”45 The historical, continuous nature of the
damage in Kivalina also was recognized by the insurer in Steadfast, which
argued that the damage had been ongoing for decades prior to the Steadfast policies’ issuance in 2003. Additionally, in Comer, plaintiffs alleged that
defendants’ activities led to the substantial increase in hurricane ferocity
over the past thirty years.46 Likewise, in American Electric Power, plaintiffs
alleged that “[d]efendants and their predecessors in interest have emitted
large amounts of carbon dioxide from their combustion of fossil fuels for
many years,” and cited to some defendants’ continuous operations dating
back to 1837.47 Thus, the allegations of the global warming complaints
could provide grounds to argue for the triggering of historical occurrencebased policies.
Given the factual allegations present, the governing law on what is commonly referred to as the “trigger” of coverage might ultimately determine
which policies are called on to insure the given claim. In cases where property damage or bodily injury was alleged to occur over several policy periods,
courts have employed several different trigger theories: (1) the “manifestation” trigger, (2) the “injury-in-fact” trigger, and (3) the “continuous” trigger. The manifestation trigger triggers a single policy period, i.e., the one
on the risk when the injury or damage manifests itself for the first time.48
The injury-in-fact trigger holds that coverage is triggered by actual injury
or property damage during the policy period and is not limited to the first
policy period in which that damage manifests itself.49 This trigger requires
proof of actual injury during the policy period and does not rely on a presumption of continual injury from first exposure through the discovery of
damage as is the case with the continuous trigger theory.50 The application
of these trigger theories will vary among jurisdictions, with some providing
45. Complaint for Damages ¶ 3, Native Vill. of Kivalina v. ExxonMobil Corp., No. 4:08cv-01138-SBA (N.D. Cal. Feb. 26, 2008).
46. Third Amended Class Action Complaint, supra note 10, ¶ 6.
47. Complaint ¶ 102, Connecticut v. Am. Elec. Power Co., No. 1:04-cv-05669-LAP
(S.D.N.Y. July 21, 2004).
48. Eagle-Picher Indus., Inc. v. Liberty Mut. Ins. Co., 523 F. Supp. 110, 111 (D. Mass.
1981); Boardman Petroleum v. Federated Mut. Ins. Co., 498 S.E.2d 492, 498 (Ga. 1998); Corduroy Rubber Co. v. Home Indem. Co., No. 191846, 1997 Mich. App. LEXIS 1723, at *14
(Ct. App. May 23, 1997); see also Kalis et al., supra note 36, § 2.02[C][2], at 13–14.1.
49. Montrose Chem. Corp. of Cal. v. Admiral Ins. Co., 913 P.2d 878, 895 n.16 (Cal.
1995); Sentinel Ins. Co. v. First Ins. Co., 875 P.2d 894, 915 (Haw. 1994); Boston Gas Co. v.
Century Indem. Co., 910 N.E.2d 290, 301 n.21 (Mass. 2009); see also Kalis et al., supra note
36, § 2.02[C][4], at 16–17.
50. Associated Aviation Underwriters v. Wood, 98 P.3d 572, 600 (Ariz. Ct. App. 2004);
Benjamin Moore & Co. v. Aetna Cas. & Sur. Co., 843 A.2d 1094, 1096 (N.J. 2004); Towns v.
N. Sec. Ins. Co., 964 A.2d 1150, 1164–65 (Vt. 2008); see also Kalis et al., supra note 36,
§ 2.02[C][4]–[5], at 16–19.
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Tort Trial & Insurance Practice Law Journal, Spring/Summer 2010 (45:3-4)
more coverage options depending on the trigger applied.51 In the context
of global warming claims, the injury-in-fact or continuous trigger would
seem to maximize coverage for a policyholder, but that conclusion would
depend on a full analysis of the policyholder’s insurance program, including the existence of self-insured retentions, deductibles, insurer insolvencies, prior exhaustion of limits, and other similar issues.
B. Damages Resulting from Property Damage or Bodily Injury
Whether claims-made or occurrence-based, most general liability policies insure damages that the policyholder is legally obligated to pay arising from property damage or bodily injury. Policyholders should be able
to establish that the allegations in the global warming complaints to date
satisfy those requirements.
1. Definition of Property Damage and Bodily Injury52
Under most general liability policies, property damage is often defined as
“physical injury to tangible property, including all resulting loss of use of
that property.”53 Many current general liability policies define bodily injury
to mean “bodily injury, sickness or disease sustained by a person, including
death resulting from any of these at any time.”54
The complaints in the global warming claims to date are replete with allegations of property damage or bodily injury. For example, the complaint
in Comer sought damages for, among other things, loss of property, loss of
the use and enjoyment of property, loss of loved ones, and personal injury.55
Additionally, examples from the current complaints provide fertile grounds
for policyholders to argue that the underlying plaintiffs are seeking damages for property damage or bodily injury:
Comer
The Defendants’ GHG emissions have contributed to sea level rise, which has
a number of severe consequences including, but not limited to the following:
(a) Direct loss of private property as land is subsumed under rising sea levels
and destroyed by saltwater intrusion; (b) Loss of use and quiet enjoyment
51. For a listing of each state’s application of the various trigger theories, see the charts
provided in Kalis et al., supra note 36, § 2.02[E], at 26–53 (Supp. 2009).
52. The allegations of the global warming complaints may also constitute personal injury
under some CGL policies. Historic policies defined personal injury to encompass “wrongful
entry or eviction or other invasion of the right of private occupancy.” See Kalis et al., supra
note 36, § 8.02, at 4–12. Policyholders should also explore any coverage options for this type
of harm.
53. See ISO Commercial General Liability Form No. CG 00 01 12 07, at 15, § V.17.a
(2007) [hereinafter ISO Form].
54. Id.
55. Third Amended Class Action Complaint, supra note 10, ¶ 40.
Insurance Coverage for Global Warming Liability Claims
823
of private property caused by rising sea levels, saltwater intrusion, increased
water temperatures, increased tropical storm activity, loss of habitat used for
hunting and fishing and other recreation, and numerous other forms of property damage; (c) Loss of the use and enjoyment of public property caused
by the subsumption and erosion of public beaches; (d) Loss of the use and
enjoyment of public trust resources caused by subsumption of and saltwater
intrusion into habitat for fish and wildlife . . . ; and (e) Increased risk of property damage and loss as a result of hurricane activity in the Gulf of Mexico.
Coastal wetlands and beaches act as a natural buffer and barrier to cyclonic
storms in the Gulf of Mexico, and to the extent that they are being destroyed
by rising sea levels, coastal residents have become much more prone to storm
damage.56
Kivalina
Global warming is destroying Kivalina through the melting of Arctic sea ice
that formerly protected the village from winter storms. . . . The result of the
increased storm damage is a massive erosion problem. Houses and buildings
are in imminent danger of falling into the sea as the village is battered by
storms and its ground crumbles from underneath it.57
American Electric Power
The threatened injuries to the plaintiffs and their citizens and residents from
continued global warming include increased heat deaths due to intensified
and prolonged heat waves; increased ground-level smog with concomitant
increases in respiratory problems like asthma; beach erosion, inundation of
coastal land, and salinization of water supplies from accelerated sea level rise;
reduction of the mountain snow pack in California that provides a critical
source of water for the State; lowered Great Lakes water levels, which impairs
commercial shipping, recreational harbors and marinas, and hydropower generation; more drought and floods, resulting in property damage and hazard to
human safety; and widespread loss of species and biodiversity, including the
disappearance of hardwood forests from the northern United States.58
In sum, a policyholder should be able to establish that damages awarded
on the basis of such allegations satisfy the property damage or bodily injury
requirement of general liability policies.
2. Definition of Damages
Most standard general liability policies cover sums that the policyholder is
“legally obligated to pay as damages” because of property damage or bodily
injury.59 However, standard policy language does not define the word dam56.
57.
58.
59.
Id. ¶ 30.
Complaint for Damages, supra note 45, ¶¶ 3– 4.
Complaint, supra note 47, ¶ 3.
See ISO Form, supra note 53, at 1, § I.1.a.
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Tort Trial & Insurance Practice Law Journal, Spring/Summer 2010 (45:3-4)
ages, leaving the courts to interpret this term in the context of insurance
disputes.60 Insurers typically argue that the term limits their coverage obligations to only compensatory relief sought by an underlying plaintiff.
Even under the insurers’ restrictive definition, complaints such as those in
Comer and Kivalina that seek monetary damages for property damage or
bodily injury meet this definition. Policyholders, however, may argue for
a broader interpretation that would not draw a distinction between typical compensatory and equitable relief and would insure injunctive relief
as sought in cases like American Electric Power. Not surprisingly, environmental claims provide a broad background for much of this dispute in the
GHG context. In that context, the majority of courts have rejected the
insurers’ narrow reading of as damages and have found that governmentmandated environmental remediation costs are damages under a general
liability policy.61 Thus, in cases such as American Electric Power, where
plaintiffs are seeking to impose restrictions on defendants’ GHG emissions, the costs that would be incurred in complying with a court order
imposing such restrictions could be covered depending on the particular
jurisdiction’s law on this issue.
C. Fortuitous Events and Damage
Most liability policies contain some provision that excludes damage intentionally caused by the policyholder.62 Insurers therefore frequently contend
that liability policies have an express or implied “fortuity” requirement, i.e.,
the policy insures only fortuitous occurrences or events. Insurer-side commentators have already argued that damage caused by a policyholder’s GHG
emissions may not arise from a fortuitous occurrence because companies
have long known that they were emitting GHGs and nonetheless continued to do so.63 Indeed, one insurer has apparently already successfully relied
on an intentionality argument to deny coverage (subject to appeal) in the
one coverage case to date. Thus, policyholders seeking coverage for global
warming claims can expect to face fortuity defenses from their insurers,
which could appear in several forms, including arguments that (i) there
is no occurrence under the policy because the alleged damage was not the
result of an accident but rather was caused by deliberate actions, (ii) the
60. See, e.g., id. at 1–16.
61. See Kalis et al., supra note 36, § 5.03, chart 5-1, at 12–13. But see Cinergy Corp. v.
Associated Elec. & Gas Ins. Servs., Ltd., 865 N.E.2d 571, 581–83 (Ind. 2007) (distinguishing
between remediation costs and prophylactic measures).
62. See ISO Form, supra note 53, at 2, § I.2.a.
63. See Seth A. Ribner & Deborah L. Stein, The Costs of Climate Change: Why Industry
Should Not Look to Liability Insurance to Bear Them, 17:7 Committee on Ins. Coverage Litig.,
Sept./Oct. 2007, at 13, 15–17; Max H. Stern & Jessica E. La Londe, Keep It Cool: Potential
Coverage Defenses to “Global Warming” Lawsuits, 19 Coverage, July/Aug. 2009, at 3.
Insurance Coverage for Global Warming Liability Claims
825
policyholder expected or intended the damage caused by GHG emissions,
and/or (iii) the damage caused by GHG emissions was a known loss to the
policyholder at the time that the policy was purchased. Policyholders have
potentially successful responses to each of these defenses.
1. Damages Constituting an Occurrence
Most occurrence-based liability policies cover property damage or bodily
injury during the policy period that is caused by an occurrence. Occurrence is generally defined in liability policies as “an accident, including
continuous or repeated exposure to substantially the same general harmful conditions.”64 The focus of this definition is the word accident, which
usually requires an unexpected, unforeseen, or unintended happening or
event. Most jurisdictions require that both the act and the resulting damages be intended by the insured in order for the event not to be classified
as an accident for occurrence purposes.65 Thus, an event will be considered
an accident when the resulting damage was fortuitous and not intentional,
regardless of whether the act giving rise to the damage was intentional.66
Courts are split over whether the required showing of intent is the policyholder’s subjective intent or an objective standard.67 The majority view
supports the use of a subjective standard, which is consistent with the typical occurrence definition that the damage not be expected or intended from
the standpoint of the insured.68 Regardless of the standard, intent is viewed
at the time of the alleged act giving rise to the damage at issue.69 As a result,
insurers should not be able to rely solely on the argument that policyholders were intentionally emitting GHGs and, therefore, are precluded
from coverage for the unexpected damage or injury that has resulted from
global warming. Most jurisdictions place the burden on an insurer to come
forward with evidence that a policyholder intended for its act to cause the
resulting harm.70 In the global warming context, given the alleged causal
chain between GHG emissions and the alleged result of global warming,
which, in turn, allegedly causes its own set of unique harms, it would seem
64. See ISO Form, supra note 53, at 14, § V.13.
65. Prime TV, LLC v. Travelers Ins. Co., 223 F. Supp. 2d 744, 751 (M.D.N.C. 2002);
Ind. Farmers Mut. Ins. Co. v. N. Vernon Drop Forge, Inc., 917 N.E.2d 1258, 1270–71 (Ind.
Ct. App. 2009); Terre Haute First Nat’l Bank v. Pac. Employers Ins. Co., 634 N.E.2d 1336,
1338 (Ind. Ct. App. 1993); Atl. Cement Co. v. Fid. Cas. Co. of N.Y., 459 N.Y.S.2d 425, 429
(App. Div. 1983); N.C. Farm Bureau Mut. Ins. Cov. v. Stox, 412 S.E.2d 318, 325 (N.C. 1992);
Haimbaugh v. Grange Mut. Cas. Co., 2008 Ohio 4001, at *29–36 (Ct. App. Aug. 7, 2008).
But see Collin v. Am. Empire Ins. Co., 21 Cal. App. 4th 787, 810 (Ct. App. 1994) (holding that
deliberate conduct is not an accident regardless of whether the damage was intended).
66. See cases cited in note 65.
67. Kalis et al., supra note 36, § 6.03[A], at 5–8 (Supp. 2009).
68. Id.
69. See cases cited in note 65.
70. Id.
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that insurers would have an uphill battle to establish that industrial defendants intended that their business operations would cause global warming,
which in turn would cause stronger hurricanes or the erosion of Kivalina’s
island.
Timing also is a key issue with respect to knowledge regarding global
warming. Although global warming may be a hot topic in the popular
media of late, the injury-producing events alleged in the global warming
complaints span into past decades when that was certainly not the case.
The state of knowledge today (whatever that may be) cannot be imposed
on a policyholder for acts that occurred decades ago. Because the subjective intent of the policyholder at the time of the injury-producing act must
be shown in the majority of jurisdictions, each case will be a unique set of
facts with respect to the policyholder’s historical state of knowledge.
Notwithstanding the foregoing arguments, the recent decision in Steadfast found that the Kivalina Complaint did not allege an occurrence under
general liability policies. In that case, Steadfast argued that the Kivalina
Complaint asserts that the damages sustained were a known and foreseeable consequence of AES’s operation of fossil fuel–fired electricitygenerating plants, and, thus, the damages were not caused by an accident.
The court apparently found this argument persuasive and held that “Steadfast has no duty to defend AES in connection with the underlying Kivalina
litigation because no ‘occurrence’ as defined in the policies has been alleged in the underlying Complaint.”71
The impact of the Steadfast decision on future coverage claims is unclear,
but any impact will certainly be influenced by several key aspects of the ruling. First, there is no written opinion from which to gather any insight into
the court’s analysis of the issues at hand. The lack of detail in the reasoning
of the court gives the opinion limited precedential value in other situations.
Second, Steadfast argued that Virginia law used an objective standard to
examine whether the damages were the natural and probable consequences
of an intended act and did not require proof that the policyholder actually
intended the damage. If the court found that this is indeed the state of Virginia law, then it is in the minority of states on this issue.72 Third, it appears
that the court based its decision on Steadfast’s argument that Virginia’s
“eight corners” rule (i.e., wherein the court looks at the four corners of
the complaint to see if the allegations, if proven, would provide a basis for
coverage under the four corners of the insurance policy) dictated summary
judgment because the nature of the Kivalina Complaint was based on AES’s
71. Order, Steadfast Ins. Co. v. AES Corp., No. 2008-858 (Arlington County, Va. Cir.
Ct. Feb. 5, 2010), available at www.insurancelawforum.com /uploads/file /Steadfast%20SJ%20
Order%202-5-2010.pdf.
72. See notes 65–69 and accompanying text.
Insurance Coverage for Global Warming Liability Claims
827
intentional acts and foreseeable consequences. The Kivalina Complaint,
however, arguably provides a basis for liability grounded in negligence, not
intentional conduct, and at least raises issues of fact on the policyholder’s
intent or forseeability that would preclude summary judgment on that
basis. For example, both the federal and state nuisance causes of action are
based on defendants’ acts that were “intentional or negligent” in creating,
contributing to, or maintaining a public nuisance.73 Negligent conduct, and
even intentional conduct with unintended results as discussed above, can be
covered claims.74 Indeed, the court had previously denied the insurer’s motion for summary judgment on the exact same issue only two months earlier on the grounds that questions of material fact existed on issues such as
the allegations of negligence, nuisance, and intentional conduct.75 Fourth,
to the extent that the Steadfast decision has any precedential value, it would
be, at best, very limited. The decision is arguably limited to the factual allegations against AES and does not apply to other defendants in Kivalina
because the allegations as to knowledge about GHG emissions and global
warming differ among defendants. For example, the Kivalina Complaint
alleged certain facts about specific statements regarding global warming
and GHG emissions in AES’s annual reports, statements that presumably
had not been made by other defendants. Further, the decision is limited to
the Kivalina case and is not applicable to the other global warming claims,
which should provide sufficient grounds for the finding of an occurrence
under most general liability policies. For example, the Comer Complaint
has a count based on negligence, and neither the trespass nor the nuisance
claim alleges that defendants intentionally caused the resulting damage.76
Similarly, the nuisance claims in American Electric Power are based on allegations that defendants negligently or intentionally created and contributed to the nuisance of global warming.77 Finally, AES has appealed the
Steadfast ruling to the Virginia Supreme Court. Thus, the final word on
these coverage issues has not yet been rendered by Virginia courts.
2. Expected or Intended
Coupled with the lack of an occurrence argument, insurers also are likely
to allege that policyholders expected or intended the damage for which
they seek coverage. Older liability policies contained language in the definition of occurrence requiring that the damages not be expected or intended
by the insured. More recent policies usually contain a similar provision as
73. See Complaint for Damages, supra note 45, ¶¶ 252, 265.
74. See notes 64–69 and accompanying text.
75. See Steadfast Ins. Co. v. AES Corp., No. 2008-858, 2009 WL 5242863 (Va. Cir. Ct.
Dec. 3, 2009).
76. Third Amended Class Action Complaint, supra note 10, ¶¶ 28–35.
77. Complaint, supra note 47, ¶¶ 153, 167–86.
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Tort Trial & Insurance Practice Law Journal, Spring/Summer 2010 (45:3-4)
an exclusion. In either situation, the debate is very similar to that discussed
in the occurrence section above, and the insurer generally has the burden
of proving the policyholder’s intent or expectation in this regard.78 As previously discussed, the majority rule is that the policyholder must expect or
intend the resulting damage, with the focus being the subjective intent of
the policyholder at the time of the injury-causing act.79 Most jurisdictions
also require that the insurer prove that the exact damage was intended, and
it does not suffice to show that the policyholder intended a different result
or some portion of the actual damages in question.80 One additional consideration when the policyholder is a corporation is who in the corporation
must intend or expect the damage. Policyholders would argue that such
intent must be formed by senior management or the control group and
not just any employee of the company, which is the broad standard that the
insurers would most likely prefer. The case law is split on the issue.81
3. Known Loss
The known loss or loss-in-progress doctrine is typically an extracontractual doctrine based on the argument that an insurer should not be required
to cover losses that were not truly contingent at the time the policyholder
78. See, e.g., Nationwide Mut. Ins. Co. v. Gaskill, No. COA05-538, 2006 N.C. App. LEXIS
498, at *3 (Ct. App. Mar. 7, 2006); Allstate Ins. Co. v. Campbell, 2009 Ohio 6055, at *19–20
(Ct. App. Nov. 17, 2009).
79. See, e.g., State Farm Fire & Cas. Co. v. Chestang, 952 So. 2d 1101, 1104–05 (Ala.
2006); Vt. Mut. Ins. Co. v. Walukiewicz, 966 A.2d 672, 682 (Conn. 2009); Tri-S Corp. v.
W. World Ins. Co., 135 P.3d 82, 103 n.8 (Haw. 2006); Auto-Owners Ins. Co. v. Harvey, 842
N.E.2d 1279, 1290 (Ind. 2006) (analyzing policyholder’s actions from subjective perspective
but permitting such intent to be inferred from conduct as matter of law); United Fire & Cas.
Co. v. Shelly Funeral Home, Inc., 642 N.W.2d 648, 653–54 (Iowa 2002); Spivey v. Safeco Ins.
Co., 865 P.2d 182, 189 (Kan. 1993); Great Am. Ins. Co. v. Gaspard, 608 So. 2d 981, 985 (La.
1992); Auto-Owners Ins. Co. v. Churchman, 489 N.W.2d 431, 434 (Mich. 1992); RAM Mut.
Ins. Co. v. Meyer, 768 N.W.2d 399, 405 (Minn. Ct. App. 2009); N.C. Farm Bureau Mut. Ins.
Co. v. Stox, 412 S.E. 2d 318, 323–24 (N.C. 1992); Allstate Ins. Co. v. Garth, No. 02A019409-CV-0020, 1995 Tenn. App. LEXIS 656, at *5–6 (Ct. App. Oct. 10, 1995); Farmers &
Mechs. Mut. Ins. Co. v. Cook, 557 S.E.2d 801, 807 (W. Va. 2001) (noting that the language
“from the standpoint of the insured” compels application of subjective test); Davidson v.
Hoke, 532 S.E.2d 50, 57 (W. Va. 2000).
80. See, e.g., Linemaster Switch Corp. v. Aetna Life & Cas. Corp., No. CV91-0396432S,
1995 Conn. Super. LEXIS 2229, at *76–77 (Super. Ct. July 31, 1995); James Graham Brown
Found., Inc. v. St. Paul Fire & Marine Ins. Co., 814 S.W.2d 273, 278–79 (Ky. 1991); N.C.
Farm Bureau Mut. Ins. Co. v. Stox, 412 S.E.2d 318, 322–25 (N.C. 1992); Goodyear Tire &
Rubber Co. v. Aetna Cas. & Sur. Co., 769 N.E.2d 835, 844 (Ohio 2002). But see PSI Energy,
Inc. v. Home Ins. Co., 801 N.E.2d 705, 728 (Ind. Ct. App. 2004) (declaring that coverage will
be barred even if the insured did not intend the “precise injury or severity of damage that in
fact occurs”) (citation omitted).
81. See, e.g., Olin Corp. v. Ins. Co. of N. Am., 762 F. Supp. 548, 551–52, 564 (S.D.N.Y.
1991) (focusing on intent of executives); Bituminous Cas. Corp. v. Kenway Contracting, Inc.,
240 S.W.3d 633, 639 (Ky. 2007) (holding corporation “can act only through its officers”);
Upjohn Co. v. N.H. Ins. Co., 476 N.W.2d 392, 400–01 (Mich. 1991) (imputing knowledge of
employees acting within the scope of business).
Insurance Coverage for Global Warming Liability Claims
829
purchased the insurance policy.82 These doctrines were developed, and are
typically applied, in the context of first-party property insurance where the
property damage is known prior to the policy period.
These doctrines are applied differently in the third-party liability insurance context, though. The loss covered by general liability policies is the
legal obligation to pay damages; and, thus, to the extent that these doctrines even apply in the third-party insurance context, the issue is whether
the policyholder was aware of the legal liability at the inception of the
policy.83 Many jurisdictions require that an insurer prove that there was a
“certainty of legal liability” before the policy was issued to make the liability a known loss.84 On the other hand, some jurisdictions employ a lesser
standard examining whether the policyholder was, or should have been,
aware of a substantial likelihood of the loss at the time of purchasing
the insurance policy.85 Under either standard, the insurer would seemingly have to prove what the defendant company knew about potential
global warming liabilities and when it knew it (i.e., before the policy was
written).86 Although this issue will be a fact-specific inquiry about what
each policyholder knew about the global warming claims and when, policyholders generally can point to a couple of facts to show that such claims
were not known losses when the policies, especially historical ones, incepted, namely, (1) global warming claims are only of a recent vintage, and
82. Some policies may contain an exclusion (sometimes referred to as a Montrose endorsement) relating to property damage that is ongoing or has occurred prior to the inception of
the policy, which presents different issues than addressed in this section. The insurer would
have the burden of proving the application of such an exclusion, and the focus is typically on
whether a loss is in progress without regard to the policyholder’s knowledge of the loss. See,
e.g., Stern & La Londe, supra note 63, at 3.
83. See, e.g., Stonewall Ins. Co. v. Asbestos Claims Mgmt. Corp., 73 F.3d 1178, 1214–16
(2d Cir. 1995); City of Johnstown, N.Y. v. Bankers Standard Ins. Co., 877 F.2d 1146, 1152–53
(2d Cir. 1989); UTI Corp. v. Fireman’s Fund Ins. Co., 896 F. Supp. 362, 376–77 (D.N.J.
1995).
84. See, e.g., Pittston Co. Ultramar Am. Ltd. v. Allianz Ins. Co., 124 F.3d 508, 518 (3d Cir.
1997) (stating that “certainty of legal liability” is required for the known loss doctrine to bar
coverage); Montrose Chem. Corp. of Cal. v. Admiral Ins. Co., 913 P.2d 878, 906 (Cal. 1995)
(holding that coverage is not barred “as long as there remains uncertainty about damage or
injury that may occur during the policy period and the imposition of liability upon the insured, and no legal obligation to pay third party claims has been established”); Ins. Co. of N.
Am. v. Kayser-Roth Corp., 770 A.2d 403, 415 (R.I. 2001) (declaring that as long as “ ‘there is
uncertainty about the imposition of liability and ‘no legal obligation’ to pay yet established,’ ”
the claim is insurable notwithstanding the known loss doctrine (quoting Montrose Chem., 913
P.2d at 905)).
85. See, e.g., Mo. Pac. R.R. v. Am. Home Assurance Co., 675 N.E.2d 1378, 1381 (Ill. App.
Ct. 1997); Atchison, Topeka & Santa Fe Ry. Co. v. Stonewall Ins. Co., 71 P.3d 1097, 1136
(Kan. 2003); State v. Hydrite Chem. Co., 695 N.W.2d 816, 831 (Wis. Ct. App. 2005); see also
Turnkey Landfill of Danbury Inc. v. CIGNA Ins. Co., No. 85-E-98 (N.H. Super. Ct. Nov.
12, 1992), reprinted in 7-5 Mealey’s Litig. Rep.: Ins. 10 (Dec. 1, 1992); Astro Pak Corp. v.
Fireman’s Fund Ins. Co., 665 A.2d 1113, 1116 (N.J. Super. Ct. App. Div. 1995).
86. See supra notes 83–85 and accompanying text.
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Tort Trial & Insurance Practice Law Journal, Spring/Summer 2010 (45:3-4)
no liability has ever been imposed; and (2) no court has yet to establish the
causal link between GHG emissions and the injury and damages alleged in
the global warming complaints.
D. Applicability of the Pollution Exclusion
If the policyholder establishes that global warming liabilities fall within
the terms of the basic insuring agreement of the policy, the primary area
of contention will then likely shift to the application and interpretation of
widely used pollution exclusion clauses. As more than one court has noted,
“the scope of [the pollution] exclusion has been described as one of the
most hotly litigated insurance coverage questions to arise over the past
three decades. . . . [R]arely has any issue spawned as many court decisions,
and as variant in rationales and results.”87 Initially, it is important to note
not only that the insurer bears the burden of proving that the pollution
exclusion in a policy bars coverage but also that ambiguous language in
the exclusion will be construed in favor of coverage.88 Because there has
yet to be a published decision regarding the application of the pollution
exclusion to GHG liabilities (the Steadfast decision did not address the pollution exclusion), whether the insurers can satisfy that burden will depend
on several factors: (1) the language of the pollution exclusion, if any, in the
policy; (2) whether GHG emissions are pollutants as encompassed within
the language of the exclusion; and (3) how the reasonable expectations of
the policyholder apply to the pollution exclusion.
1. Historical Development of the Pollution Exclusion
Policyholders that are sued in global warming cases should first determine
if the insurance policies at issue contain any type of pollution exclusion that
the insurers will likely contend serve as a bar to coverage. Prior to 1970,
most general liability policies did not contain any provision purporting
to exclude coverage for damage allegedly caused by pollution. Beginning
around 1970, however, many liability policies contained what has been
called the “qualified pollution exclusion.” Although the language of these
exclusions varied to some degree, they essentially purported to preclude
coverage for property damage or bodily injury allegedly resulting from
87. Apana v. TIG Ins. Co., 574 F.3d 679, 680 (9th Cir. 2009) (citing Madison Constr. Co.
v. Harleysville Mut. Ins. Co., 735 A.2d 100, 106 (Pa. 1999); Porterfield v. Audubon Indem.
Co., 856 So. 2d 789, 800 (Ala. 2002)) (internal quotations omitted).
88. See, e.g., Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 614 (Colo. 1999); PSI
Energy, Inc. v. Home Ins. Co., 801 N.E.2d 705, 726–27 (Ind. Ct. App. 2004); Shelter Mut.
Ins. Co. v. Williams, 804 P.2d 1374, 1383 (Kan. 1991); Andrew Robinson Int’l Inc. v. Hartford
Fire Ins. Co., 2006 Mass. Super. LEXIS 236, at *8–9 (Super. Ct. 2006); Travelers Cas. & Sur.
Co. v. Ribi Immunochem Research, Inc., 108 P.3d 469, 476 (Mont. 2005); Charles Beseler
Co. v. O’Gorman & Young, Inc., 911 A.2d 47, 49 (N.J. 2006); TIG Specialty Ins. Co. v. Koken, 855 A.2d 900, 908 (Pa. Commw. Ct. 2004).
Insurance Coverage for Global Warming Liability Claims
831
pollution, unless the release, dispersal, escape, etc., of the pollution was
“sudden and accidental” or “sudden, unexpected, and unintended.”89 The
sudden or accidental language served as a substantial limitation on the exclusion’s scope.90
Around 1985, many insurers, seeking to again narrow coverage, deleted
the “sudden and accidental” exception to the pollution exclusion.91 The
1985 version also removed language requiring the pollutants to be deposited “into or upon land, the atmosphere or any watercourse or body
of water.”92 The 1985 version still is used in a large proportion of CGL
policies today and is often referred to as the “absolute pollution exclusion” because it purports to exclude coverage for any liability arising from
pollution-caused damage regardless of whether the pollution incident was
sudden and accidental.
If a policyholder is seeking coverage under a policy that contains a qualified pollution exclusion, it may be able to avoid the exclusion if it can
establish that the alleged contamination of the environment was sudden
and accidental. Courts in various jurisdictions have interpreted this phrase
differently.93 Although many courts have agreed that the word accidental
means “unintended,” courts disagree regarding the proper meaning of the
word sudden.94 Some courts have ruled that sudden means “instantaneous.”95
Thus, under this interpretation, the policyholder can only avoid the qualified pollution exclusion if it can prove that the seepage or release incident
occurred abruptly, not gradually. Many other courts have interpreted sudden to mean “unexpected.”96 Under this view, a policyholder may be able
to obtain coverage notwithstanding the presence of the qualified pollution
exclusion in the policy if the policyholder can establish that it did not ex89. See Kalis et al., supra note 36, § 10.04[B][1].
90. See id. chart 10-1, at 38.2–.4.
91. See id. § 10.04[C][1].
92. Id.
93. For an analysis of each state’s handling of the qualified pollution exclusion, see Kalis
et al., supra note 36, § 10.04[B], chart 10-1, at 38.2–.4.
94. Compare Waste Mgmt., Inc. v. Peerless Ins. Co., 340 S.E.2d 374, 382 (N.C. 1986)
(stating that “[t]he exception also describes the event—not only in terms of its being unexpected, but in terms of its happening instantaneously or precipitantly”); Hybud Equip.
Corp. v. Sphere Drake Ins. Co., 597 N.E.2d 1096, 1101 (Ohio 1992) (declaring that “ ‘sudden’
would not have any meaning in the exception if it were not interpreted to also mean ‘quick’ or
‘abrupt’ ”), with Ala. Plating Co. v. U.S. Fid. & Guar. Co., 690 So. 2d 331, 334–35 (Ala. 1996)
(construing sudden and accidental to mean “unexpected and unintended”); Lansco, Inc. v. Dep’t
of Envtl. Prot., 350 A.2d 520, 524 (N.J. Super. Ct. Ch. Div. 1975) (stating that “ ‘sudden’
means happening without previous notice or on very brief notice; unforeseen; unexpected;
unprepared for”).
95. See, e.g., Shell Oil Co. v. Winterther Swiss Ins. Co., 12 Cal. App. 4th 715, 754–55 (Ct.
App. 1993); N. Am. Philips Corp. v. Aetna Cas. & Sur. Co., No. 88C-JA-155, 1995 Del. Super. LEXIS 359, at *19–21 (Super. Ct. Mar. 10, 1995).
96. See Kalis et al., supra note 36, § 10.04[B], chart 10-1, at 38.2–.4.
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pect or intend the alleged discharge, release, or escape of alleged global
warming–contributing GHGs.
2. GHGs: Pollutants for Purposes of the Pollution Exclusion?
If a relevant policy contains a qualified or absolute pollution exclusion, a
fundamental issue to be resolved is whether GHGs are pollutants. Many
standard CGL policies define pollutant as “any solid, liquid, gaseous or
thermal irritant or contaminant, including smoke, vapor, soot, fumes,
acids, alkalis, chemicals and waste.”97 Thus, for insurance purposes, a pollutant must be an irritant or contaminant. No court has yet to rule directly
on the issue of whether GHGs are pollutants in the context of liability
coverage for global warming claims. Carbon dioxide, which is typically
the most prevalent of the regulated GHGs emitted, arguably falls outside
those categories because it has not traditionally been considered an irritant, contaminant, or pollutant. Carbon dioxide is a naturally occurring,
colorless, odorless substance that is exhaled by every human being every
second of every day, is used by plants and humans alike, and is generally
harmless to human health.98 Based on these facts, carbon dioxide cannot be
neatly classified into any of the specified forms of irritants and contaminants such as smoke, vapor, soot, fumes, acids, alkalis, chemicals, or waste.
Thus, the most prevalent GHG would not appear to fit within the definition of pollutant.99
Insurers have already made several arguments in support of the contention that GHGs are pollutants, including reference to (1) the averments of
the complaints involving global warming claims; and (2) the Massachusetts
decision, which held that emitted carbon dioxide was a pollutant under the
Clean Air Act.100
The relevant insurance policy language controls whether GHGs constitute pollutants under a pollution exclusion. Also, contrary to the insurer’s
argument in Steadfast, the global warming complaints do not allege that
the damages were caused by pollution, nor do they characterize GHGs as
pollutants.101 In fact, the complaints in Kivalina, Comer, American Electric
Power, and General Motors never once allege that GHGs are pollutants.
97. See ISO Form, supra note 53, at 15, § V.15.
98. See, e.g., Donaldson v. Urban Land Interests, Inc., 564 N.W.2d 728, 732 (Wis.
1997).
99. Moreover, most jurisdictions interpret any ambiguity in insurance policy language in
favor of coverage. See infra notes 112–14.
100. See, e.g., Complaint for Declaratory Relief, supra note 30, ¶¶ 50–54; see generally
Stern & La Londe, supra note 63.
101. See generally Complaint for Damages, supra note 45; Third Amended Class Action
Complaint, supra note 10; Complaint, supra note 47; Complaint for Damages and Declaratory Relief, California v. Gen. Motors, Corp., No. 3:06-cv-05755-MJJ (N.D. Cal. Sept. 20,
2006).
Insurance Coverage for Global Warming Liability Claims
833
The Massachusetts ruling is also not dispositive. First, the Massachusetts
decision had nothing to do with the application of the pollution exclusion
in a liability insurance policy but instead was focused on EPA’s ability to
regulate GHGs. The focal issue for the Court was whether EPA had the
statutory authority to regulate GHG emissions from new motor vehicles
and, if so, whether its stated reasons for refusing to do so were valid.102 The
Court held that EPA had the authority to regulate GHG emissions for new
motor vehicles and could not fail to take action unless it determines that
GHGs do not contribute to climate change or provides another reasonable
explanation for not doing so.103 The Court did not address insurance coverage for third-party liabilities resulting from global warming claims, let
alone the applicability of so-called pollution exclusions to such claims. This
same reasoning would apply to EPA’s recent endangerment finding relating
to GHGs in response to the Massachusetts decision.
Second, most insurance policies define pollutant more narrowly than
does the Clean Air Act. As the Court in Massachusetts stated,
The Clean Air Act’s sweeping definition of “air pollutant” includes “any air
pollution agent or combination of such agents, including any physical, chemical . . . substance or matter which is emitted into or otherwise enters the
ambient air.” On its face, the definition embraces all airborne compounds of
whatever stripe, and underscores that intent through the repeated use of the
word “any.”104
As Justice Scalia pointed out in his dissent, “it follows [from the majority
opinion’s holding] that everything airborne, from Frisbees to flatulence,
qualifies as an ‘air pollutant.’ ”105 Thus, the Court interpreted a broad definition of air pollutant in favor of broad regulatory agency action, which
does not translate to holding that GHGs meet the more narrow definition
of pollutant contained in the pollution exclusion in general liability policies.
The pollution exclusion was clearly not meant to apply to “all airborne
compounds of whatever stripe.”
Finally, courts that have been faced with the issue of whether carbon
dioxide is a pollutant for insurance purposes outside the context of global
warming claims have reached a different conclusion than the Massachusetts
case. For example, in Donaldson v. Urban Land Interests, Inc., the Supreme
Court of Wisconsin addressed whether carbon dioxide was a pollutant in a
case where plaintiff claimed injury from exhaled carbon dioxide overexpo-
102.
103.
104.
105.
Massachusetts v. Envtl. Prot. Agency, 549 U.S. 497, 505 (2007).
Id. at 528, 534.
Id. at 528–29 (emphasis in original).
Id. at 558 n.2.
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sure caused by inadequate ventilation in a “sick building.”106 The court first
recognized that the terms irritant and contaminant were overbroad when
viewed in isolation because “there is virtually no substance or chemical in
existence that would not irritate or damage some person or property.”107
However, the court held that “carbon dioxide from human respiration
would not ordinarily be characterized as a ‘pollutant’ ” and that although
carbon dioxide can cause injury in high concentrations, it would not necessarily be understood by a reasonable insured to meet the policy definition
of a pollutant, either.108 The court also found it “significant that, unlike the
nonexhaustive list of pollutants contained in the pollution exclusion clause,
exhaled carbon dioxide is universally present and generally harmless in all
but the most unusual instances.”109 As a result, the court concluded that the
policy definition of pollutant was ambiguous and that the pollution exclusion would not bar coverage because the policyholder could reasonably
expect coverage for the injuries arising from carbon dioxide.110
In sum, policyholders will have to contend with not only the common,
imprecise verbiage that GHGs constitute air pollution but also the many
current climate change efforts that use such terms outside of the context
of the general liability policy’s definition of pollutant. Nevertheless, the relevant policy’s definition of the term pollutant is paramount, and policyholders have several counterarguments in response to insurer allegations that
GHGs are pollutants.
3. Policyholder’s Reasonable Expectations as to Coverage
In considering application of the pollution exclusion, courts may find that a
policy’s definition of pollutant is not clear one way or the other. As the Donaldson decision illustrates, most courts addressing the application of the pollution exclusion to carbon dioxide or other similar gases have held that the
pollution exclusion is ambiguous when applied to these types of claims.111
If a court is satisfied that the language of the exclusion is not sufficiently
clear, the court may ask whether the policyholder reasonably expected the
injuries at issue to be covered or, alternatively, to be excluded under the
policy at the time of contracting and what the policyholder’s reasonable
106. 564 N.W.2d 728, 730–31 (Wis. 1997).
107. Id. at 732 (citing Pipefitters Welfare Educ. Fund v. Westchester Fire Ins. Co., 976
F.2d 1037 (7th Cir. 1992)).
108. Id.
109. Id.
110. Id. at 732–33.
111. Langone v. Am. Family Mut. Ins. Co., 731 N.W.2d 334, 338 (Wis. Ct. App. 2007);
Richardson v. Nationwide Mut. Ins. Co., 826 A.2d 310, 332–33 (D.C.), decision vacated on other
grounds, 832 A.2d 752 (D.C. 2003) (en banc).
Insurance Coverage for Global Warming Liability Claims
835
expectations as to coverage were at the time as well.112 Additionally, insurance policy language is to be construed strictly against the insurer.113 And
if policy language is ambiguous, the language, particularly the language of
exclusions, is given an interpretation most favorable to the insured.114 Thus,
the one court to have addressed the application of the pollution exclusion
in the context of carbon dioxide emissions found the exclusion ambiguous
and construed the exclusion in favor of coverage.115
Policyholders will likely argue that the pollution exclusion was never
intended to apply in the context of global warming claims.116 Some courts
have refused to apply the pollution exclusion outside the context of traditional environmental pollution.117 Is the harm alleged to be caused by
GHG emissions the kind of harm intended to fall within the pollution
exclusion? In response to that question, policyholders would focus on the
type of alleged pollution at issue in the global warming claims, i.e., pollution that has as its primary component a gas that is typically not dangerous
to humans, is necessary for the survival of many living organisms on earth,
and is not the kind of inherently dangerous substance that served as the
impetus behind the pollution exclusion.118 The driving force behind the
introduction and subsequent amendments to the pollution exclusion was
insurer liability for injuries and costs caused by traditional environmental
pollution from hazardous waste. Thus, courts have often not extended the
112. See, e.g., Donaldson, 564 N.W.2d at 731. Some courts consider the reasonable expectations of the parties irrespective of any ambiguity. See Reg’l Bank of Colo. v. St. Paul Fire &
Marine Ins. Co., 35 F.3d 494, 497 (10th Cir. 1994).
113. See, e.g., Acadia Ins. Co. v. Vt. Mut. Ins. Co., 860 A.2d 390, 394 (Me. 2004); RAM
Mut. Ins. Co. v. Meyer, 768 N.W.2d 399, 404 (Minn. Ct. App. 2009); Grange Ins. Co. v. Brosseau, 776 P.2d 123, 126 (Wash. 1989).
114. See, e.g., Royal Indem. Co. v. Soneco / Ne., Inc., 183 F. Supp. 2d 526, 531 (D. Conn.
2002); Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 613 (Colo. 1999); Charles Beseler
Co. v. O’Gorman & Young, Inc., 911 A.2d 47, 49 (N.J. 2006); TIG Specialty Ins. Co. v. Koken, 855 A.2d 900, 908 (Pa. Commw. Ct. 2004).
115. See Donaldson, 564 N.W.2d at 731.
116. Some courts have also held that the pollution exclusion does not apply to coverage
under a separate grant of products and completed operations in a policy. See W. Am. Ins. Co. v.
Tufco Flooring E., Inc., 409 S.E.2d 692, 696 (N.C. Ct. App. 1991) (holding that where damages occurred on the insured’s premises and resulted from its work, the pollution exclusion
did not preclude coverage), overruled in part by Gaston County Dyeing Mach. Co. v. Northfield Ins. Co., 524 S.E.2d 558, 564–65 (N.C. 2000). But see, e.g., Bituminous Cas. Corp. v.
St. Clair Lime Co., No. 94-6436, 1995 U.S. App. LEXIS 30948, at *17 (10th Cir. Oct. 27,
1995) (holding that pollution exclusion was not overridden by completed operations coverage
where claim was not based on products liability); Crescent Oil Co. v. Federated Mut. Ins. Co.,
888 P.2d 869, 873–74 (Kan. Ct. App. 1995) (same).
117. See Gamble Farm Inn, Inc. v. Selective Ins. Co., 656 A.2d 142, 145–47 (Pa. Super. Ct.
1995); Kent Farms, Inc. v. Zurich Ins. Co., 998 P.2d 292, 295 (Wash. 2000); see also Apana v.
TIG Ins. Co., 574 F.3d 679, 682–83 (9th Cir. 2009) (detailing numerous such holdings in
various jurisdictions).
118. See Noel C. Paul, The Price of Emission: Will Liability Insurance Cover Damages Resulting
from Global Warming?, 19 Loy. Consumer L. Rev. 468, 496 (2007).
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application of the pollution exclusion to alleged pollutants beyond those
situations for which the exclusion was originally intended.119
Policyholders could also argue that the type of claims alleged in the
American Electric Power, Comer, and Kivalina cases (i.e., those alleging that
the release of various gases into the atmosphere causes a worldwide atmospheric imbalance that, in turn, leads to certain dangerous climate changes)
almost certainly was not on the minds of either insurers or policyholders
at the time of contracting for historical policies as such suits are only of
the most recent vintage.120 Indeed, some insurer-side commentators have
recognized that the current editions of the pollution exclusion do not
apply, and were not contemplated to apply, to global warming claims and
have lobbied for new policy provisions directly addressing GHG emission
claims and climate change liabilities.121 In response, and as discussed in the
next section, insurance companies are already in the process of developing
new products and provisions to deal with global warming claims and climate change risks. In the meantime, policyholders have strong grounds to
argue that pollution exclusions in policies issued to date do not bar coverage for GHG emission claims.
v. developments in the insurance industry
in response to climate change risks
Given the possibility for third-party liability claims, as well as directors’ and
officers’ insurance and property insurance claims, insurers are responding
to the potential impact of climate change–related losses in several ways.
Insurers have become wary of the potential large-scale insured losses that
119. See Nav-Its, Inc. v. Selective Ins. Co. of Am., 869 A.2d 929, 930 (N.J. 2005); MacKinnon v. Truck Ins. Exch., 73 P.3d 1205, 1208–09, 1216 (Cal. 2003); Belt Painting Corp. v.
TIG Ins. Co., 795 N.E.2d 15, 18–21 (N.Y. 2003); Keggi v. Northbrook Prop. & Cas. Ins. Co.,
13 P.3d 785, 790 (Ariz. Ct. App. 2000); Nautilus Ins. Co. v. Jabar, 188 F.3d 27, 31 (1st Cir.
1999); Apana v. TIG Ins. Co., 574 F.3d 679, 682–83 (9th Cir. 2009); Am. States Ins. Co. v.
Koloms, 687 N.E. 2d 72, 81 (Ill. 1997); Doerr v. Mobil Oil Corp., 774 So. 2d 119, 126–28
(La. 2000); Donaldson v. Urban Land Interests, Inc., 564 N.W.2d 728, 732 (Wis. 1997).
120. The date of purchase of the relevant policies will impact the effectiveness of this argument because awareness of global warming has arguably increased over time.
121. See Alex Hamer, Climate Change and the Liability Insurer: In Light of Recent Developments
in the Debate Concerning Climate Change Liability, Is It Time for a Climate Change Exclusion?,
Reynolds Porter Chamberlain LLP Legal Update ( July 11, 2008) (“[I]t is anticipated
that insurers will in due course, seek to place some reliance upon the pollution exclusion in
response to climate change claims. However, there are real doubts that the language of such
clauses will be effective to meet the specific risks of climate change, of which the draftsmen
were not even conscious when the current exclusions were formulated. Whilst, for example,
certain greenhouse gases . . . may be regarded as pollutants, others, such as carbon dioxide,
may not.”), available at www.rpc.co.uk / Default.aspx?sID=787&lID=0 (select “Legal Update
11 July 2008”).
Insurance Coverage for Global Warming Liability Claims
837
may arise from global warming–related claims. Swiss Re published a report in 2009 that stated, “We expect . . . that climate change–related liability will develop more quickly than asbestos-related claims and believe
the frequency and sustainability of climate change–related litigation could
become a significant issue within the next couple of years.”122 Accordingly,
insurers appear to be intent on limiting their exposure to climate change–
related losses. Although insurers generally have not yet added to their
policies exclusions specifically applicable to climate change–related losses,
policyholders should be aware that as the risk of climate change–related
losses increase, in terms of both third-party liability and first-party perils,
insurers may change their policy terms in the future to limit exposure to
such losses.123
Numerous insurers, including ACE, AIG, Allstate, Chubb, Travelers,
and Zurich, as well as brokers such as Aon and Willis, have established dedicated teams or task forces charged with setting forth their strategies related
to global warming.124 Additionally, insurers have sought to minimize their
exposure to climate change risks by encouraging environmentally sound
behavior by their policyholders.125 Some insurers are also considering the
introduction of “green” insurance products that offer reduced premiums to
policyholders as a reward for sustainable business practices.126
Insurance regulators have taken note of emerging climate change–
related risks as well. The National Association of Insurance Commissioners (NAIC) has adopted an annual survey to collect information from the
largest insurers on their exposure to climate change risks, although requirement of completion of the survey is at the discretion of each state. NAIC
suggests that, beginning with the 2009 reporting year, states require property/casualty and health / life insurers with annual premiums in excess of
$500 million to answer the annual survey.127 NAIC would have states lower
the survey’s premium threshold to $300 million for the 2010 reporting year
and thereafter.128 At the time that the new requirement was introduced,
122. See Urs Leimbacher et al., The Globalisation of Collective Redress: Consequences for the
Insurance Industry, Swiss Re 3 (2009), www.swissre.com.
123. See Dave Lenckus, Insurers Have Yet to Restrict Climate Change-Related Losses, Bus. Ins.,
Nov. 17, 2008, at 23. Aon has reported that at least one insurer has inserted a climate change
exclusion into an automaker’s pollution liability policy. Id.
124. See Evan Mills, From Risk to Opportunity: Insurer Responses to Climate
Change 13 (Ceres 2009). Bermuda-based insurer Catlin Group Ltd. even sponsored a research expedition to the Arctic to gather data on the effect of global warming on Arctic sea ice.
See Sarah Veysey, Catlin Backs Expedition to Measure Arctic Ice, Bus. Ins., May 25, 2009, at 3.
125. See Mills, supra note 124, at 13.
126. Id.
127. See Nat’l Ass’n of Ins. Comm’rs, Insurer Climate Risk Disclosure Survey (Mar.
28, 2010), www.naic.org.
128. Id.
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Pennsylvania Insurance Commissioner Joel Ario, who chairs the NAIC
Climate Change and Global Warming Task Force, said, “Climate change
will have huge impacts on the insurance industry and we need better information on how insurers are responding to the challenge.”129 Through the
surveys, regulators hope to understand the insurers’ exposure to coverage
claims related to global warming, climate-related risks to the insurers’ own
investments, and any steps that may be taken to mitigate losses for the insurers themselves and their policyholders.130
Policyholders should continue to monitor these changes as well as the
insurers’ efforts to address climate change risks because they will likely
impact the purchase and renewal of insurance policies in the future, particularly if global warming claims become a mainstay litigation risk.
vi. conclusion
In conclusion, whether liability ever will be imposed on defendants for
claims that GHG emissions contribute to global warming is yet to be
determined. Moreover, whether recent pro-plaintiff decisions permitting plaintiffs to proceed with their GHG emission lawsuits will open the
floodgates of global warming litigation, as many commentators predict,
remains to be seen. Nonetheless, companies that are named defendants in
such lawsuits should carefully consider whether their current and historical
CGL policies may help respond to such claims.
129. See Meg Fletcher, NAIC Requires Disclosure of Climate Change Risks, Bus. Ins., Mar. 23,
2009.
130. Id.