Most people are aware that there are a lot of insurance coverage disputes surrounding the events of September 11, 2001. What might be surprising is that the courts are still hearing cases.
A specific example of this can be found in American Home Assurance Co. v. The Port Authority of New York and New Jersey et al. (Note: American Home is part of AIG).
The case involves people who worked at the World Trade Center site during its construction, and who subsequently contracted diseases related to asbestos exposure. In a ruling made in December last year, a New York City judge ruled that American Home/AIG must continue to cover claims related to asbestos poisoning during the construction of the World Trade Center buildings — and must continue defending and indemnifying the Port Authority for those claims into the future.
This particular case involved a policy issued by AIG that was in force from 1966 to 1976. It was called an occurrence-based policy as opposed to a claims-made policy. An occurrence-based policy basically means that, if there was an incident or an accident that occurred during the policy period (while the policy was in force), it’s a potentially covered claim.
Here, AIG continued to defend and cover these claims for 25 years, until it filed a lawsuit seeking to end its obligation to defend and pay out claims stemming from the 1966-1976 coverage period.
The New York City Judge granted summary judgment to all the defendants who AIG named, including the Port Authority and all of the construction companies. The judge ruled that AIG was trying to rely on policy language that wasn’t actually in the policy, and rejected their argument. Therefore, AIG must continue to defend and cover these claims on an ongoing basis as they continue to come in — as long as they involve accidents, injuries, or exposure claims that occurred while the policy was in force, from 1966 to 1976.
This ruling reaffirmed some general principles of insurance law that are very helpful to insureds. One of those principles is that if an insurance company wants to get some sort of legal do over and avoid covering claims without a trial, it will have to show that there is no possible factual or legal basis on which a company may eventually be held liable under its policy.
What’s interesting about asbestos cases is that when someone gets a disease related to asbestos, they don’t necessarily know when they got it; they don’t know when it developed and from what period of time they were exposed. That makes it more difficult for someone to prove that they actually got injured during the policy period. The claimants don’t have to prove that they actually suffered an injury during the policy period. All that is required of them is to prove that they were there and exposed to the asbestos when the policy was in force — not that the disease manifested itself or came about while the policy was in force. As a result, AIG must continue to cover these claims for as long as they exist, which will hopefully be for as long as there are claims.
Evan S. Schwartz
Founder of Schwartz, Conroy & Hack