William Powell Co. v. OneBeacon Ins. Co., 2020 Ohio App. LEXIS 2200 (Ohio Ct. At.. June 10, 2020)
The William Powell Company has been embroiled in a years-long dispute with its insurers regarding coverage for asbestos-related liabilities. In this decision, the court addressed whether the language of certain excess liability policies supported vertical exhaustion or horizontal exhaustion of coverage. Horizontal exhaustion means that all triggered primary policies must be exhausted before any excess policy can be triggered. Vertical exhaustion means that only the primary policy that directly underlies an excess policy must be exhausted before the excess policy can be triggered.
The insurers also argued that their excess policies were not triggered because they contained language limiting their application to net losses in excess of underlying insurance, including “the applicable limits of any other underlying insurance collectible by the insured.” Powell argued that the cited language meant only that the underlying insurance covering the same policy period had to be exhausted. The court agreed with Powell, holding that the term “underlying insurance” in the excess policies referred only to policies covering the same time period as the excess policies. Because the other policy at issue covered a different time period, it did not cover the same “occurrence” as the excess policies and therefore did not need to be exhausted in order to trigger the excess policies.
Powell also argued that Ohio’s “all sums” allocation law allowed it to choose one insurer to reimburse all of its costs, leaving the insurer to seek contribution from other applicable policies. The insurer Powell selected argued that Powell had waived its right to allocate, or that it unreasonably delayed its allocation selections and thereby triggered the laches doctrine, and that the result should be pro rata allocation of covered losses among all applicable insurance policies. The court disagreed, noting that as a matter of fact Powell had asserted its right to allocation promptly and frequently.