In an action seeking insurance coverage for environmental contamination, the United States Court of Appeals for the Second Circuit held that “all sums” allocation would apply to the policies at issue, and therefore the policyholder could choose which of the multiple triggered policy periods it preferred to cover the entire loss, up to the limits of the policies in that year. Olin Corp. v. OneBeacon Am. Ins. Co., No. 15-2047(L) (2d Cir. July 18, 2017).
The Second Circuit applied a recent New York Court of Appeals decision, In re Viking Pump, Inc., 52 N.E.3d 1144 (N.Y. 2016), which involved coverage for asbestos bodily injury claims under liability insurance policies spanning the period 1972 to 1985. The New York court held that for insurance policies containing “noncumulation” and “prior insurance” provisions, all sums allocation, not “pro rata” allocation, is appropriate, reasoning that those provisions anticipate that policies in successive years could indemnify the same loss. Additionally, the Viking Pump court permitted “vertical exhaustion,” meaning that the policyholder could obtain excess coverage in the selected policy year without first exhausting all triggered primary policies horizontally across policy years.
In Olin, the Second Circuit considered an excess insurer’s argument that a different allocation approach was warranted because...
