Accessing Excess Policies In Continuous Trigger Cases

Like many companies who made products containing asbestos, Kaiser Cement and Gypsum Corporation has over the past several decades defended thousands of asbestos bodily injury claims brought by construction workers who allege they were exposed and suffered bodily injury resulting from exposure to Kaiser Cement's asbestos containing products. And for years Kaiser Cement has been fighting its insurers to determine who pays for defense and indemnity in connection with that asbestos litigation. On April 8, 2013, a California Court of Appeal answered one of the questions regarding which insurer pays for what, ruling that the occurrence limits contained in primary policies issued by one of Kaiser Cement's primary insurers could not be stacked. (Kaiser Cement & Gypsum Corp. v. Ins. Co. of the State of Penn., ___ Cal. App. 4th ___, 2013 WL 1400920.) Instead, that insurer is liable for only a single occurrence limit, despite the availability of numerous other occurrence limits contained in other unexhausted primary policies issued by that same insurer.

Because asbestos bodily injuries are continuous (i.e., after initial exposure, the injury "occurs" year-after-year as part of an ongoing injury process within the claimant's body), insurance policies spanning decades can be triggered by the alleged injuries. Earlier in Kaiser Cement's coverage case, the Court of Appeal ruled that each asbestos bodily injury claim constitutes a separate "occurrence"—and thus each asbestos bodily injury claim is subject to a separate per occurrence limit. (London Market Insurers v. Superior Court, 146 Cal. App. 4th 648.) Had Kaiser Cement's policy limits been provided on an aggregate basis, such a ruling may not have much significance. For instance, Kaiser Cement had three other primary insurers who have paid their aggregate policy limits and their coverage now is exhausted. But the fourth, Truck Insurance Exchange, issued policies for a number of years that did not contain an aggregate limit and coverage under those policies for asbestos bodily injury claims are subject only to their per occurrence limits.

To minimize its exposure, Truck argued that the policy that Kaiser Cement selected to respond to asbestos bodily injury claims only required Truck to pay a single occurrence limit from any of its unexhausted primary policies. In a clause entitled "Limits," the Truck policy selected by Kaiser Cement states as follows (emphasis added):

The limit of liability stated in...