New York’s Highest Court Rules in Favor of “All Sums” and Vertical Attachment in Certified Question from Delaware Supreme Court

by Traub Lieberman Straus & Shrewsberry LLP

In the recent decision of Viking Pump, Inc., et al. v. TIG Insurance Co., et al., 2016 N.Y. LEXIS 1018 (N.Y. May 3, 2016), the New York Court of Appeals (New York’s highest court), on questions certified by the Delaware Supreme Court, held that “all sums” joint and several liability and vertical exhaustion applied to the specific policy language set forth in excess insurance policies at issue in the asbestos bodily injury coverage case pending in Delaware.

At issue in Viking Pump were two questions from the Delaware Supreme Court certified to the New York Court of Appeals:

(1) whether “all sums” or “pro rata” allocation applies where the excess insurance policies at issue either follow form to a non-cumulation provision or contain a non-cumulation and prior insurance provision; and

(2) whether, in light of the answer to certified question #1, horizontal or vertical exhaustion is required before certain upper level excess policies attach.

The umbrella and excess policies at issue required the insurers to pay “all sums in excess of the retained limit” because of personal injury resulting from an occurrence, a term defined, in part, as personal or bodily injury occurring during each relevant policy period.  Notably, the policies contained language stating that “[f]or the purpose of determining the limits of [the Insured’s liability]: (1) all personal injury . . . arising out of continuous or repeated exposure to substantially the same general conditions . . . shall be considered as the result of one and the same occurrence.”

More significantly, majority of policies at issue were subject to a “non-cumulation” of liability or “anti-stacking” provision stating in relevant part that:

[i]f the same occurrence gives rise to personal injury … which occurs partly before and partly within any annual period of this policy, the each occurrence limit and the applicable aggregate limit or limits of this policy shall be reduced by the amount of each payment made by [Liberty Mutual] with respect to such occurrence, either under a previous policy or policies of which this is a replacement, or under this policy with respect to previous annual periods thereof.

While certain of the policies at issue did not follow form to this particular provision, they contained similar non-cumulation provision.

In beginning its analysis, the New York Court of Appeals made clear that its ruling was limited to questions of allocation and exhaustion.  The Court then revisited its prior pro-rata allocation holding in Consolidated Edison Co. of N.Y. v. Allstate Ins. Co., 98 NY2d 208 (N.Y. 2002), emphasizing it did:

… not reach its conclusion by adopting a blanket rule, based on policy concerns, that pro rata allocation was always the appropriate method of dividing indemnity among successive insurance policies. Rather, we relied on our general principles of contract interpretation, and made clear that the contract language controls the question of allocation.” The Court went on to stress that in Consolidated Edison it was made clear that, “different policy language might compel all sums allocation.”

The Court observed that the policies at issue in Consolidated Edison did not include non-cumulation clauses, and that as a result, the policies before it were “substantively distinguishable,” and presented a novel argument under New York law.  The Court ultimately concluded that it was unable to reconcile the non-cumulation/prior insurance clauses with a pro rata allocation scheme, since the clauses:

… clearly contemplate that multiple successive insurance policies can indemnify an insured for the same loss or occurrence by acknowledging that a covered loss or occurrence may ‘also [be] covered in whole or in part under any other excess [p]olicy issued to the [Insured] prior to the inception date’ of the instant policy.

In contrast, the Court of Appeals stated that the essence of pro rata allocation is that the insurance policy language limits indemnification to losses and occurrences during the policy period and therefore, no two insurance policies, unless containing overlapping or concurrent policy periods, would indemnify the same loss or occurrence. According to the Court, the non-cumulation clause negates the pro rata premise by “presupposing that two policies may be called on to indemnify the insured for the same loss or occurrence.” Importantly, the Court stressed that in a pro rata allocation, the non-cumulation clauses would be rendered surplusage, which is an impermissible result under the New York principles of contract interpretation.

Importantly, the Court also found that the so-called “continuing coverage” language within certain of the non-cumulation and prior insurance provisions, reinforced its holding that all sums, not pro rata allocation was intended by such policies.

Having concluded that the presence of the non-cumulation clauses required an “all sums” rather than a pro rata methodology of allocation, the Court then turned to the second certified question, which the Court framed as whether the insureds were required under the terms of the excess policies to “horizontally” exhaust all triggered primary and umbrella excess layers before accessing any of the additional excess insurance policies, or whether the insureds need only “vertically” exhaust the primary and umbrella policies.  In holding that “vertical attachment” applied, the Court found it significant that all of the excess policies “hinge their attachment on the exhaustion of underlying policies that cover the same policy period as the overlying excess policy, and that are specifically identified by either name, policy number, or policy limit.” Further, the Court stated that “vertical exhaustion is conceptually consistent with an all sums allocation, permitting the Insured to seek coverage through the layers of insurance available for a specific year.”

Finally, the Court considered but dismissed the insurers’ contention that attachment language contained or incorporated into the excess policies required horizontal exhaustion. The language in question provided that the insurer will pay “all sums in excess of the retained limit”, defined as the relevant limit of liability of underlying policies, “plus all amounts payable under other insurance, if any.” The insurers argued that the “other insurance” available to the insureds necessarily included coverage provided by policies issued in successive years. While characterizing the insurers argument as “not completely baseless”, the Court, citing to Consolidated Edison, held that these “other insurance clauses” were not implicated and do not apply in situations involving successive – – as opposed to concurrent – – policies. Accordingly, the Court held that in absence of any policy language suggesting a contrary intent, the excess policies “are triggered by vertical exhaustion of underlying available coverage within the same policy period.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Traub Lieberman Straus & Shrewsberry LLP | Attorney Advertising

Written by:

Traub Lieberman Straus & Shrewsberry LLP

Traub Lieberman Straus & Shrewsberry LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.