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(Article from Insurance Law Alert, October 2019)

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Connecticut’s highest court has ruled that a manufacturer of asbestos-containing products is not responsible for payment of claims during years in which it was unable to buy insurance.  R.T. Vanderbilt Co., Inc. v. Hartford Accident and Indemnity Co., 2019 WL 4926802 (Conn. Oct. 4, 2019).

The coverage dispute arose from thousands of personal injury lawsuits against Vanderbilt.  The company and approximately thirty of its insurers sought declarations regarding their respective obligations as to the underlying claims.  As discussed in our March 2017 Alert, a Connecticut appellate court issued the following rulings in this matter: (1) a continuous trigger governs asbestos-related claims; (2) Connecticut recognizes an unavailability exception to pro rata allocation, under which a policyholder is not responsible for uninsured periods if insurance was not available in the marketplace during that time; (3) a standard pollution exclusion is ambiguous as to whether it applies only to traditional environmental contamination or “more broadly to circumstances such as the release of asbestos dust and similar toxic industrial products within a building when used as intended”; and (4) occupational disease exclusions are not limited to claims brought by a policyholder’s own employees, but rather bar claims brought by complainants who developed occupational disease while using the policyholder’s products in the course of working for another employer.

The Connecticut Supreme Court affirmed the trigger, allocation and pollution exclusion rulings based on the “thorough and well-reasoned opinion” of the appellate court.  As to the occupational disease exclusion, the Connecticut Supreme Court emphasized that the exclusion did not contain language expressly limiting its application to Vanderbilt’s employees, whereas other exclusions did include such verbiage.  The court rejected Vanderbilt’s assertion that under principles of workers’ compensation law, “occupational disease” is a “term of art that is tied to the employee-employer relationship” such that “no specific reference to employees needed to be added to the exclusion.”  The court explained: “to read the exclusions as urged by Vanderbilt would require us to add otherwise nonexistent language specifically limiting their application to Vanderbilt’s employees, which is contrary to how we interpret . . . insurance policies.”