The William Powell Company makes industrial valves. Some valves manufactured before 1987 contained asbestos. In 2001, Powell began receiving personal-injury claims emanating from asbestos exposures involving its products. Faced with potentially thousands of claims, Powell sought defense and indemnification under various insurance policies. At issue here were occurrence-based policies that were written by a predecessor to OneBeacon Insurance Company between 1955 and 1977.
OneBeacon asked the court to define “occurrence” as used in the policies as Powell’s decision to manufacture valves containing asbestos without providing adequate warnings. Powell contended that each individual plaintiff’s exposure to asbestos constituted an “occurrence.” The court noted that other courts addressing the “occurrence” issue have adopted one of three theories: (1) a theory that looks to the underlying “cause” of the accident, (2) a theory that focuses on the “effect” of the accident, or (3) a theory that looks to the “triggering event” that caused liability. The court opted for the “triggering event” theory, citing the definition of occurrence as “injurious exposure to conditions.” However, the court also applied the “triggering event” theory to policies that did not define “occurrence.”
The court further held that the pre-1965 policies were ambiguous as to annualization, i.e. whether the policy limits on multi-year policies applied to each year individually or to the entire policy term. The court therefore looked to extrinsic evidence, including the parties’ performance under the policies, insurance industry norms, and premiums paid for the policies. The court held that such evidence in this case demonstrated that the policy limits applied annually.