In a prior post, we discussed a New York trial-court decision that found an insurance policy issued in 1966, to insure the construction of the World Trade Center, continues to cover modern-day asbestos claims, with each claim constituting an individual occurrence. Last week, in American Home Assurance Co. v. The Port Authority of N.Y. and N.J., 7628-7628A (1st Dep’t Nov. 15, 2018), an intermediate appellate court affirmed that decision, agreeing that coverage is triggered for claims tied to alleged asbestos exposure at the WTC site in the 1960s and ’70s.
The appellate court held that the policy’s plain terms, providing coverage for injuries arising out of the “Premises – Operations Hazard,” “means that the policy covers injuries that result from operations that occurred during the policy period.” The court further held that the insurer’s restrictive reading of the policy, applying a manifestation trigger and limiting coverage to only injuries that manifested during the policy period, was inconsistent with the policy, which required the insurer to pay “all sums” that the insured becomes legally obligated to pay as damages for personal injuries “in connection with the construction of [the WTC project].” And the court agreed that because there was no single event or accident, all claims alleging exposure to asbestos from spray-on fireproofing did not arise from a single occurrence. The court did, however, find that the lower court was wrong to conclude that the insurer’s defense duties continued even after the policy limits had been exhausted.
As we advised last year, this case serves as a reminder that the policy language used to define an “occurrence” or other applicable trigger is of paramount importance, and policyholders should be sure to obtain a policy that covers the specific risks they may face. Equally important is that policyholders consider their historic insurance policies, including predecessor entity coverages, when faced with long-tail injury claims. As shown here, even insurance issued more than a half-century ago can prove valuable in the face of present-day claims.