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The UK's highest court has issued its decision in the Employers' Liability Insurance "Trigger" Litigation: BAI (Run Off) Ltd v Durham & Ors, [2012] UKSC 14 (28 March 2012), and finally resolved a long-pending dispute over insurance claims by the relatives of workers who died after being exposed to asbestos. The Supreme Court has ruled, without reference or comparison to the earlier resolution of similar issues in the United States, that insurance liability in the UK is triggered when an employee is exposed to asbestos, not when mesothelioma later manifests itself.
As we discussed in our prior article, the legal battle over employers' liability insurance coverage for mesothelioma arising from workplace exposure has been ongoing in the UK since at least 2006 and has delayed the resolution of thousands of injury and death claims. The legal dispute centered on which insurance companies providing employers' liability insurance cover were legally obligated to indemnify employers against claims from workers who became ill, often many years after their employment had ended, and whether the insurer on coverage when the claimant was exposed to asbestos should pay the claim or the insurer on coverage when the mesothelioma developed. The Court of Appeal had decided that it really depended upon the wording of the policies in question.
The UK Supreme Court has now determined after hearing extensive argument that the wording of the particular policies does not really make a difference after all; and all such policies, regardless of their wording, that were in effect when exposure occurred must respond to the claims.
As those in the United States familiar with the battles over insurance coverage for asbestos damages will recognize, "trigger" is a term of art often used in discussion of insurance coverage for the event that activates coverage under a particular insurance policy. The U.S. courts have looked to various trigger theories in cases, such as those involving asbestos injury or damage, where the difficulty in determining when the underlying injury or damage actually happened raises questions as to which among multiple policies might apply.
While the courts in England were considering between exposure and manifestation triggers under various policy language, the U.S. courts had wrestled more broadly with three generally accepted trigger of coverage theories and one subset.
Exposure Trigger
The exposure theory is perhaps best explained in Insurance Co. of N. Am. v. Forty-Eight Insulations, Inc., 633 F.2d 1212 (6th Cir. 1980). The Forty-Eight Insulations court concluded, similar to the UK Supreme Court, that coverage is triggered under the exposure theory when the first injury-causing conditions occur or upon the first inhalation of asbestos fibers.
Manifestation Trigger
The manifestation, or discovery, trigger activates coverage under the policy in place when the personal injury or property damage becomes known, or is discovered by, the property owner or victim. However, even when U.S. courts say they have applied the manifestation theory, they have not always been consistent in doing so. Some courts find the policy is triggered when the damage is actually discovered while others trigger the policy in place when the damage could or should have been discovered.
Continuous, Multiple or Triple Trigger
The continuous trigger has also been referred to as the multiple trigger or triple trigger. This trigger originated in asbestosis cases where bodily injury progresses and becomes more serious over time. The court in Keene Corp. v. Insurance Co. of N. Am., 667 F.2d 1034 (D.C. Cir. 1981), contains a discussion of the origin and application of the multiple trigger theory:
[T]he allocation of rights and obligations established by the insurance policies would be undermined if either the exposure to asbestos or the manifestation of asbestos-related disease were the sole trigger of coverage. We conclude, therefore, that inhalation exposure, exposure in residence, and manifestation all trigger coverage under the policies. We interpret "bodily injury" to mean any part of the single injurious process that asbestos-related diseases entail.
Injury-in-fact Trigger
The injury-in-fact, or actual injury, coverage trigger under a general liability policy has been found when the personal injury or property damage underlying the claim actually occurs. GenCorp., Inc. v. AIU Ins. Co., 104 F.Supp.2d 740 (N.D. Ohio, 2000), for example, held that the appropriate trigger for claims arising out of the disposal of hazardous waste was: "a continuous trigger employing injury-in-fact as the initial triggering event … if GenCorp can substantiate its claim that the injuries ... were continuing in nature … coverage will be triggered for the periods between the first point of injury-in-fact and manifestation."
The injury-in-fact approach, on consideration, may really be identical to the continuous or triple-trigger theory. In Wolverine World Wide, Inc. v. Liberty Mut. Ins. Co., 2007 WL 705981 (Mich. App. 2007), the court explained:
[t]his is likely because the concept of "injury in fact" is flexible. The fact-finder can determine that injury occurred at any number of points, from initial exposure through manifestation. Further, in continuous damages cases, injury may occur repeatedly through numerous consecutive policy periods.
There seem to be as many triggers as there are U.S. courts that have considered these issues. For now, however, in England and at least in employer liability coverage cases, the UK Supreme Court has come down on exposure to asbestos as the trigger for insurance coverage.
