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Allocation of Insurance Coverage in Long Term Contamination Cases Clarified

April 22, 2009

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In the recent case of Franklin Mutual Insurance Company v. Metropolitan Property and Casualty Company, the New Jersey Appellate Division addressed how the "continuous trigger" theory originally adopted by the New Jersey Supreme Court in the case of Owens-Illinois, Inc. v. United Insurance, should be applied in allocating insurance coverage in long-term environmental contamination cases when the contaminated property at issue changes ownership while the contamination takes place.
The Court concluded that the Owens-Illinois formula is applied separately to each individual insured. They held further that the pro rata allocation principles established in Owens-Illinois apply to the carriers for each individual insured, not collectively to all of the triggered policies for all of the insureds who owned the property during the period of contamination.
Thanks to Sheila Osei for her contribution to this post.
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