Asbestos – Horizontal Exhaustion:
A Delaware State Court, applying New York law, affirmed a jury verdict in an asbestos coverage case. In addition to agreeing with the jury that the excess policies contained defense duties, the court also left intact the jury’s verdict applying an “all sums” methodology. The court found that the policies should exhaust horizontally and therefore the policyholders must exhaust all primary and umbrella policies before the excess layers may be accessed (note, that one of the umbrella policies had already exhausted and some of the other umbrella policies had already been providing coverage, which may explain why the umbrella policies were included with the primary policies rather than the excess.) Thereafter, “the policyholder may choose which excess tower will cover a claim’s ‘all sums.’” Viking Pump Inc. and Warren Pumps LLC v. Century Indem. Co. et al., No. 10C-06-141 FSS CCLD (Del. Super. Ct. Oct. 31, 2013).
A Maryland Federal District Court found that an insulation company could access excess policies for indemnification of asbestos claims before it had exhausted available primary policies in other years that were also triggered by an asbestos claim. The court’s decision was based on Maryland law, which provides for pro-rata allocation with horizontal exhaustion of triggered policy periods. The court held that the excess coverage in a given year must respond as long as the underlying primary coverage in that year is fully exhausted. The court reasoned that the excess insurers’ arguments would forever immunize excess coverage due to the fact that some primary policies had no aggregate limits of liability. The court did note that its decision was dependent on the precise language of the policies at issue. Nat’l Union Fire Ins. Co. of Pittsburgh Pa. et al. v. Porter Hayden Co., No. 1:03-cv-03408 (D. Md. Jan. 2, 2014).