Asbestos Claims Related to Operations Ceasing Prior to Coverage Dates of Insurance Policy Deplete Aggregate Limits U.S. Court of Appeals for the Fourth Circuit, March 26, 2018
The Walter E. Campbell Company (WECCO) was a company that handled, sold, installed, and removed insulation materials containing asbestos. Since the mid-80s, WECCO was subjected to numerous lawsuits from individuals alleging damages due to asbestos exposure. WECCO is now defunct.
Although many claims against WECCO remained pending, its insurers contended that they were no longer contractually obligated to defend or indemnify WECCO because their aggregate limits had been exhausted. WECCO responded by arguing that the insurers improperly allocated operations claims as completed operations claims. Unlike completed-operations claims, operations claims are subject only to per-occurrence limit. That is, no aggregate limit applies to operations claims. WECCO argued that the completed-operations hazard applied only to injuries that started after WECCO’s operations completed. Thus, according to WECCO, the insurers’ aggregate limits had not yet been exhausted.
The court disagreed. Applying Maryland law, the court held that claims under any policy whose coverage period was entirely subsequent to WECCO’s asbestos-related operations (which concluded in 1972) were completed-operations claims. Payments from the insurers on those claims counted towards the aggregate limits of the policies. The court further noted that WECCO had the burden of proving that particular claims fell under the operations hazard rather than the completed-operations hazard and had failed to carry the burden.