Connecticut Appeals Court Adopts Continuous Trigger and Unavailability Rule of Insurance Allocation Appellate Court of Connecticut, March 2017
R.T. Vanderbilt Company, Inc., which formerly manufactured and sold industrial talc that purportedly contained asbestos, brought this action seeking, inter alia, a declaratory judgment to determine its rights and obligations, and those of approximately thirty defendant insurance companies, as to the costs of defending and indemnifying the plaintiff in thousands of underlying lawsuits brought against it in the past several decades that alleged personal injuries resulting from exposure to asbestos. In this 147-page decision, the court determined a multitude of issues related to allocation of defense and indemnity costs and application of exclusions.
Notably, the court adopted a continuous trigger theory of insurance coverage. The court reasoned that the efficient administration of justice required resolution of the injury issue as a matter of law to avoid the uncertainty and increased litigation costs that would result from resolution of it as a fact question on a case-by-case basis, as the latency period for asbestos related diseases may be extremely long, their etiology is complex and not fully understood, it is difficult to assess when injuries are alleged to have commenced, many individuals who develop asbestos related disease are repeatedly exposed over several or more years to multiple sources of asbestos, and the relevant medical facts are widely understood and incontrovertible.
Additionally, the court refused to treat the policyholder as self-insured from 1986-2008, when Vanderbilt obtained insurance based on its good faith (but mistaken) belief that its products did not contain asbestos. The court reasoned that it is more efficient to hold insurers on the risk collectively responsible under an unavailability rule for the full injury up to the applicable policy limits than it is to transfer liability to policyholders when insurance becomes unavailable, and that the unavailability of insurance rule comported with the pro rata, time-on-the-risk allocation scheme that the Connecticut Supreme Court had already adopted.
As a final highlight, the court concluded that the pollution exclusion clauses contained in certain of the insurers’ policies were ambiguous and barred coverage for the claims against the plaintiff only when the exposure to asbestos arose from traditional environmental pollution, such as the intentional or negligent release into the public air, land or water resources of industrial and other hazardous waste, and did not bar coverage for asbestos related claims that alleged harm arising from exposure to asbestos dust released in an indoor environment during the course of manufacturing or construction activities.