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A Viking on Choppy Waters
When the New York Court of Appeals issued its decision in Consolidated Edison Company v. Allstate Insurance Co. 98 N.Y.2d 208 (2002), the issue of allocating liability for continuing losses among multiple insurers consecutively liable for the loss appeared to be all but settled. Con Ed held that under policies providing coverage for “all sums” attributable to damage occurring “during the policy period,” where there was no ability to pinpoint exactly when the loss occurred, the most equitable means of apportioning the liability for the losses is in direct proportion to each insurer's time on the risk, absent policy language to the contrary. Although the Con Ed court cautioned that it had not delivered “the last word on pro-ration,” in practice New York courts have presumed that pro rata allocation will apply in continuing injury cases involving standard CGL policy language absent unusual circumstances. See, e.g., Serio v. Public Service Mut. Ins. Co., 759 N.Y.S.2d 110 (App. Div. 2nd Dep't 2003).
This approach to allocation has been called into question, however, by the recent decision of the Delaware Court of Chancery in Viking Pump, Inc. v. Century Indem. Co., 2009 WL 3297559 (Oct. 14, 2009). Purportedly applying New York law, the Viking Pump court concluded that non-cumulation and prior insurance clauses in the policies at issue effectively trumped an express limitation of coverage to injuries taking place “during the policy period.” The court reached this conclusion by applying presumptions, unprecedented in New York law, that exposure to asbestos rather than injury triggers general liability coverage and that each claimant's exposure to asbestos invariably constitutes a separate occurrence. In charting this novel route to its all-sums result, Viking Pump not only distorts New York's allocation rules in favor of contrary Delaware law, but also muddies other deep waters of New York coverage jurisprudence including the law governing trigger and number-of-occurrences.
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