In recent decades, liabilities stemming from long-term bodily
injury or property damage—as from exposure to asbestos or
contamination of the environment—have presented a variety of
new challenges for policyholders seeking to recover from their
insurers under comprehensive general liability ("CGL")
policies. Injury or damage involved in such "long-tail"
claims typically touch multiple policy periods. Most CGL policies
are implicated or "triggered" if injury or damage happens
during the policy period, regardless of when the claim is made. An
employee's inhalation of asbestos fibers may lead to injury
that occurs over many decades, as might contamination from a leak
of hazardous material. This is quite unlike more traditional and
instantaneous "slip and fall" type bodily injury and
property damage claims, which only trigger a single liability
policy because they happen instantaneously and the resulting claim
follows quickly.
While claims involving long-term injury present many complex
factual issues, a critical legal issue raised by long-tail claims
is the scope of an insurer's obligations once an insurance
policy has been triggered. A policyholder that faces liability
claims implicating multiple years may find that the claim is
covered under many, if not all, of its insurance policies, yet
later learn that it is entitled to receive significantly less than
full coverage for the claim. Resolution of this issue, known as the
"allocation" issue, varies greatly from state to state.
In one recent decision, an Indiana appellate court reached the
opposite conclusion of the state's highest court on
questionable grounds. The question is how much coverage a
policyholder can obtain from a triggered policy.
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