When negotiating new insurance contracts, policyholders should consider obtaining assistance from insurance coverage counsel to seek inclusion of terms that accommodate vertical exhaustion. (Credit: Free use image/ALM archives)
California law has become more favorable toward companies facing liabilities based on alleged events spanning multiple years.
In a series of cases spanning over the last 30 years, the California Supreme Court adopted an all sums with stacking approach to coverage for continuous injuries. Under this approach, where an ongoing loss continued through multiple policy periods:
- The insured could call on any primary policy during this period;
- That policy would be liable for all sums up to its policy limits; and
- The insured could have access to or "stack" the limits in all the policy periods.
Left to be decided was whether a first-level excess policy could be accessed before all other underlying collectible insurance was exhausted.
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