A Connecticut appeals court’s ruling Monday that Vanderbilt Minerals LLC doesn’t have to contribute to asbestos injury claims for the years during which there was no insurance available for those risks, which may expand insurers’ asbestos liabilities by forcing them to pick up costs for such periods, attorneys say.
As part of a massive 161-page opinion addressing Vanderbilt’s asbestos coverage dispute with 30 of its insurers, a panel of the Connecticut Appellate Court ruled as a matter of first impression that state law permits an “unavailability of insurance” rule, which establishes that a policyholder is not liable for a prorated share of defense and indemnity costs for periods when insurance for a certain risk was unavailable in the marketplace.
Sherilyn Pastor, leader of McCarter & English LLP’s insurance recovery group, said that there is no windfall to policyholders under a pro rata system incorporating an unavailability rule.
“If there is a windfall, it is to insurers; rather than paying all sums for progressive and indivisible injuries undeniably covered by their policies, they instead pay only portions due under what the Connecticut court recognized is an insurer-friendly, pro-rata allocation method,” Pastor said.
Pastor cautioned, however, that the panel’s opinion left open the possibility of an equitable exception to the unavailability rule in cases where the policyholder is found to have continued manufacturing and selling products despite knowing they are harmful. Here, the panel declined to apply an exception based in part on Vanderbilt’s ongoing belief that its industrial talc did not contain asbestos.
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