Noncumulation Clause

NY Appellate Court Finds Single Limit For Multiple Parties’ Exposure To Lead Paint.

The New York Appellate Court, applying New York law, held that an insurer’s maximum total liability for successive exposure to lead paint in the same apartment was only one policy limit due to a noncumulation clause. Coverage was sought by the insured for bodily injuries sustained by children of two different families during two different periods of time, but at the same rental unit. The policy had a $500,000 limit for “each occurrence” and contained a noncumulation clause. The noncumulation clause provided “[a]ll bodily injury and property damage resulting from once accidental loss or from continuous or repeated exposure to the same general conditions is considered the result of one accidental loss.” The court rejected the argument that the alleged injuries were separate losses under the policies and found that because the children were injured by exposure to the same general conditions their injuries were part of a single “accidental loss,” and only one policy limit was available to the two families.

The insured, a landlord of a two-family house, purchased a liability insurance policy in September 1991 and renewed annually in 1992 and 1993. The Department of Health notified the landlord that a child who lived in the apartment from 1992-1993 had elevated blood lead levels and that the apartment was in violation of state regulations governing lead paint. The landlord made some repairs and was advised that the violations had been corrected. A new family moved into the apartment and again a child was found to have an elevated blood lead level. The children’s families brought two separate actions against the landlord for personal injuries allegedly caused by the lead paint exposure. The action related to the first exposure was settled for $350,000, which was paid by the insurer. The settlement for the second exposure was contingent upon the applicable policy limits and, therefore, the family sought a declaration that a separate $500,000 limit applied to each family’s claim.

The New York Court of Appeals disagreed with the family and found that the children were exposed to the same hazard, lead paint, in the same apartment.  The court reasoned that “[p]erhaps they were not exposed to exactly the same conditions, but to say that the general conditions were not the same would deprive the word general of all meaning.” There was no allegation that a new lead paint hazard had been introduced into the apartment, only that the remediation efforts were not successful. Therefore, according to the court, the same conditions endangered the children’s health. Nesmeith v. Allstate Ins. Co., No. 187 (N.Y. Nov. 25, 2014).

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