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The court stressed that “virtually every method of tion with the advent of the modern environmental
allocating long-tail tort liabilities will at times result regulatory system in the 1960s.
in apparent inequities of one sort or another,” rea- This comprehensive and rigorous analysis ulti-
soning for example that jurisdictions applying an mately led the court to conclude that the pollution
exposure trigger would place greater burden on in- exclusions only bar coverage where the claims arise
surance companies that provided coverage in early from exposure to traditional environmental pollu-
years, while in manifestation trigger jurisdictions, tion. Accordingly, the pollution exclusions did not
later insurance companies would bear the heavier preclude coverage for “claims arising from exposure
burden. Additionally, the court noted that in Con- to toxic substances such as asbestos in indoor envi-
necticut, the insurance industry already benefits ronments and/or in the course of their intended use.”
from a pro rata system instead of the policyhold-
er-friendly all sums approach. Thus, “at worst, the Looking Ahead
liabilities of any particular insurer will be no greater Several other state courts have recently addressed
than they would be in an all sums jurisdiction.” similar issues regarding trigger, allocation and un-
The court concluded that its chosen allocation availability of insurance for asbestos claims. In
system—“pro rata, time-on-the-risk, employing a Continental Insurance v. Honeywell International,
continuous trigger and an unavailability rule”— the New Jersey Supreme Court affirmed its long-
equitably distributes the burdens and maximizes standing application of the continuous trigger
the resources available to respond to claims while allocation method and the related unavailability
minimizing administrative hassles and transac- rule, and declined to recognize an equitable excep-
tion costs. tion that would hold policyholders accountable for
post-coverage conduct. Conversely, the New York
Court of Appeals recently reversed decades of law
Pollution Exclusions
Lastly, the court considered whether the pollution on the unavailability rule in its Keyspan decision.
exclusions contained in most of Vanderbilt’s policies However, New York also opened the door for the
after 1970, which exclude coverage for “bodily in- “all sums” allocation methodology where insurance
jury or property damage resulting from the release policies contain either “non-cumulation” or “con-
of pollutants,” effectively bar coverage for the under- tinuing coverage” clauses. Because an “all sums”
lying asbestos claims. Vanderbilt contended that the approach mandates joint and several insurance
pollution exclusions only apply to “traditional” en- company liability, it effectively renders the “un-
vironmental pollution and did not bar coverage for availability rule” moot.
asbestos related claims. Maryland’s high court may be next to address
Acknowledging that this was yet another ques- the issue of allocation in the context of asbestos
tion of first impression for Connecticut—and “a claims, as the court heard arguments in early No-
close one, over which ... courts are sharply divid- vember in Rossello v. Zurich American Insurance. It
ed”—the court conducted a painstaking analysis of is critical for policyholders to be aware of develop-
the plain language of the pollution exclusion. The ments in these cases, as they continue to shape the
court examined both the ordinary meaning of the battleground over insurance coverage for long-tail
contract language and its technical meaning derived asbestos liabilities.
from relevant statutes and regulations and gave due ¦

consideration to other courts’ legal conclusions re- Cort T. Malone is a shareholder in the New York
garding similar policy language. Additionally, the and Stamford offices of Anderson Kill and a mem-
court considered the drafting history and purpose ber of the firm’s insurance recovery group. Maria
of the pollution exclusion and determined that the Brinkmann is an attorney in the firm’s New York
insurance industry drafted the pollution exclusion office and also a member of the insurance recovery
to address new liabilities that had arisen in conjunc- group.

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