A Pennsylvania court on Friday rejected an insurance carrier’s argument that a chemical manufacturer’s coverage for litigation over the cleanup of a toxic waste site is limited to the policy in effect when property damage was first discovered, a ruling that could give policyholders access to a wider swath of policies for claims tied to gradual damage.
The decision was issued in Johnson Matthey Inc.’s dispute with Pennsylvania Manufacturers’ Association Insurance Co. over coverage for a Pennsylvania Department of Environmental Protection lawsuit under a series of “occurrence-based” liability policies, which extend coverage for claims stemming from damage or injuries occurring during the policy period.
For policyholders, the decision eases the path to securing coverage under multiple policies for long-term environmental contamination claims. Sherilyn Pastor, leader of McCarter & English LLP’s insurance coverage group, said the court’s ruling properly gave full effect to the language in the PMA policies and respected the policyholder’s reasonable expectations.
“After all, the language said the policies covered property damage during the policy period, not property damage discovered or manifested during the policy period,” Pastor said. “I was heartened that the court gave the policy language due consideration.”