A federal district court in California, in an asbestos coverage case involving excess insurance policies, has ruled that “only injury or damage within the policy period” triggered coverage and the “time of the event or exposure leading to the injury” was “irrelevant.”
The Case
The main dispute in this action was over the trigger of coverage for asbestos injuries under excess insurance policies issued by Compass Insurance Company. Compass contended that its policies required two triggers – exposure to asbestos and resulting injury – within the policy period for coverage. It reasoned that the definition of “occurrence” and the “Policy Period, Territory” section together meant that coverage was triggered only when exposure to asbestos and injury both happened within the policy timeline.
The insured, University Mechanical & Engineering Contractors, Inc. (“UMEC”), a California corporation in the business of installing plumbing, piping, and HVAC systems throughout California that was the defendant in multiple state court cases filed by asbestos victims, argued that asbestos injury alone was enough.
The parties moved for summary judgment.
The Court's Decision
The court granted UMEC's motion for summary judgment on the coverage trigger issue.
In its decision, the court found that the policy words “during the term of this policy” referred “to the fact of injury or damage, and not to exposure.” The court pointed out that the policies stated that an “occurrence” was “an event or continuous or repeated exposure to conditions, which unexpectedly results in injury or damage during the term of this policy.” Injury or damage, it added, was the defining characteristic of an occurrence, and the time limitation of “during the term of this policy” followed and was attached to “injury or damage.” By the ordinary meaning of these words, the court ruled, what must “result[ ] … during the term of the policy” was injury or damage. The event or exposure that caused the injury did “not also need to happen within the policy period.”
The court said that the “Policy Period, Territory” clause stating that occurrences must happen during the policy period was “of no moment.” It observed that the clause did not define “occurrence” and said that it was, “at best, ambiguous” in that it did not clearly “limit coverage to those claims in which the causal acts took place during the policy period.”
Moreover, the court added, the insurer's interpretation contravened “well-established California law holding that injury is the trigger of coverage in circumstances like the ones here.”
Accordingly, the court concluded that the policies' “plain language” required “only injury or damage within the policy period to trigger coverage” and the “time of the event or exposure leading to the injury” was “irrelevant.”
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].