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Occurrence Limits Under Multi-Year Policies: NJ Courts Are Changing Their Approach
In complex coverage cases involving 'long-tail' claims (such as asbestos bodily injury claims or property damage claims related to environmental pollution), decades of insurance policies can be put at issue. In many states, the policyholder's losses will be spread across the years in which the injury or property damage occurred on a proportionate basis, typically referred to as 'time on the risk' or pro rata allocation. E.g., Security Ins. Co. of Hartford v. Lumbermens Mut. Cas. Co., 826 A.2d 107, 116 (Conn. 2003); Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127, 141 (Utah 1997); Insurance Co. of N. Am. v. Forty-Eight Insulations, Inc., 633 F.2d 1212, 1224-25 (6th Cir. 1980).
In New Jersey, a continuous trigger and a modified pro rata allocation apply to cases involving progressive injury or damage over multiple years. E.g., Carter-Wallace, Inc. v. Admiral Ins. Co., 712 A.2d 1116, 1123-24 (N.J. 1998); Owens-Illinois, Inc. v. United Insurance Co., 650 A.2d 974, 995 (N.J. 1994). In Carter-Wallace, the New Jersey Supreme Court explained that the policyholder's total loss would be apportioned across years based on the 'degree of the risks transferred or retained' during each year in which injury or damage took place. Id. at 1121-22 (quoting Owens-Illinois). Thus, if a policyholder purchased more coverage in a particular year, a greater proportion of the loss may be allocated to that year than to years in which the policyholder purchased less coverage. While this approach seems straightforward, complications can arise if the policyholder did not only purchase policies with 'one-year' terms, but also purchased multi-year policies (ie, single policies providing coverage for more than 1 year and often over multiple annual periods). If the policyholder purchased multi-year policies, is the policyholder entitled to a single occurrence limit for the entire policy period, or can it claim a separate occurrence limit for each annual period that the policy was in effect?
While policy language varies, multi-year general liability policies typically provide a separate 'occurrence' limit and 'annual aggregate' limit. For example, a 3-year policy may provide a $1 million per 'occurrence' limit for the length of the policy, but explicitly provide a $1 million 'annual aggregate' for separate occurrences. If the claims against the policyholder are deemed to be 'multiple occurrences,' annual limits may be available under a multi-year policy, because, in that instance, the policyholder's claims would bring the annual aggregate into play. Thus, in our example, it is possible that up to $3 million in coverage would be available to the policyholder if the claims constitute three or more separate occurrences.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Warehouse Liability: Know Before You Stow!
As consumers continue to shift purchasing and consumption habits in the aftermath of the pandemic, manufacturers are increasingly reliant on third-party logistics and warehousing to ensure their products timely reach the market.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.