(Article from Insurance Law Alert, September 2016)
For more information, please visit the Insurance Law Alert Resource Center. The Delaware Supreme Court reversed a trial court ruling that manufacturers of asbestos-containing products may seek excess coverage only under policies that were in place during claimants’ first inhalation, finding that excess coverage is triggered if any bodily injury occurred during the policy periods. In re Viking Pump, Inc., 2016 WL 4771312 (Del. Sept. 12, 2016).
A Delaware trial court ruled that Viking Pump could pursue excess coverage only under policies that were in effect when the underlying asbestos claimants were first significantly exposed to asbestos. The Delaware Supreme Court overturned that ruling, holding it inconsistent with New York’s “injury in fact” trigger law. Instead, the court held that, for policy coverage purposes, bodily injury first occurs “upon cellular and molecular damage caused by asbestos inhalation, and such cellular and molecular damage occurs during each and every period of an asbestos claimant’s significant exposure to asbestos and continues thereafter.” The court explained that its ruling reflected the fact that asbestos-related injuries occur gradually and continuously after an individual's initial exposure. Notably, the court focused on “significant exposure” in setting forth the appropriate trigger, which may prompt future disputes as to what degree of exposure so qualifies.
The court addressed several other issues, including the excess insurers’ duties to defend (which varied based on applicable policy language) and the post-loss transfer of insurance rights from predecessor companies (which was found valid notwithstanding anti-assignment clauses).
The trigger ruling is the latest in a series of significant coverage decisions in this case. As discussed in our
May 2016 Alert, the New York Court of Appeals, answering certified questions, recently held that under applicable policy language, the manufacturers' policies were subject to all sums allocation and that excess policy language required vertical exhaustion.