Hunton Insurance partners Syed Ahmad and Michael Levine were interviewed by Law360 for its year-end article discussing the top insurance rulings in 2019, for their insights on two of the year’s biggest insurance decisions.
Two recent decisions addressing allocation of long-tail liabilities demonstrate that resolution of the issue under New York law depends upon the policy language at issue. Judge-made rules on “equity” and “fairness” do not control. As the New York Court of Appeals held on March 27, 2018, in Keyspan Gas East Corp. v. Munich Reinsurance America, Inc., 2018 WL 1472635 (2018), under New York law, “the method of allocation is covered for most by the particular language of the relevant insurance policy.” Both Keyspan and the April 2, 2018 decision in Hopeman Brothers, Inc. v. Continental Casualty Co., No. 16-cv-00187 (E.D. Va. Apr. 2, 2018), by the United States District Court for the Eastern District of Virginia, illustrate the importance of reviewing insurance policies – both before purchase, to ensure that they contain optimal language for coverage; and after claims arise, to ensure that the policyholder receives the benefit of insurance coverage under “legacy” and all other potentially applicable policies.
Hunton & Williams insurance partner Syed Ahmad commented in a July 19, 2017, Law360 article concerning the Second Circuit Court of Appeals’ recent decision in Olin Corp. v. OneBeacon America Insurance. In the decision, which is the subject of a July 26, 2017, Hunton blog post, the Second Circuit agreed with Olin that…
Last week, the Second Circuit remanded environmental coverage litigation between Olin Corporation and OneBeacon based on its conclusions that (1) all sums allocation applied and (2) a prior insurance provision allowed OneBeacon the opportunity to show that prior excess insurers had made payments for the same claims, thereby reducing OneBeacon’s liability for Olin’s remediation costs at five manufacturing sites.
The district court had calculated OneBeacon’s liability on a pro rata allocation. Based on the New York Court of Appeals’ intervening decision in Viking Pump (previously covered here, the Second Circuit found that an all sums allocation should apply. The decision thus allows Olin to obtain full indemnification under OneBeacon’s policy for amounts spent to remediate the manufacturing sites, up to the limits of that policy. Because the district court had applied a pro rata allocation based on pre-Viking Pump case law, the Second Circuit remanded for the district court to recalculate damages.