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Allocation: Still An Open Question in Wisconsin

By Beth A. Koehler and Stephanie V. Corrao
October 06, 2005

Allocation often is a key issue in insurance coverage cases where courts have found that long-term bodily injury or environmental contamination has taken place over many years. Occurrence-based policies typically provide coverage only for damages from injury taking place during the policy period. In many cases, courts have found it impossible to determine as a matter of fact precisely when injury took place or how much injury took place in any given period. They have thus presumed that injury took place over the entire period ' often a very lengthy period ' during which it may have taken place (eg, from first “exposure” until diagnosis of the injury or discovery of the contamination).

Assuming, therefore, that there have been multiple years of injury, the question arises as to how to allocate damages associated with the bodily injury or property damage. Under a pro rata allocation method, courts have allocated damages equally across all triggered years, regardless of the amount of insurance, if any, in each year. In states where “joint and several liability” has been adopted, courts have allowed the policyholder to “pick and choose” any year in its coverage program to respond to the claim, thus allowing the policyholder to potentially avoid years in which it may have no coverage, not enough coverage, SIRs, insolvencies or settled policies.

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