Ambiguous Policy Wording Results in Adoption of Continuous Trigger of
Coverage
The United States Court of Appeals for the Fourth Circuit certified a
question to the Supreme Court of Appeals of West Virginia asking: "[a]t
what point in time does bodily injury occur to trigger insurance
coverage for claims stemming from chemical exposure or other analogous
harm that contributed to the development of a latent illness?"
In Westfield Insurance Company v. Sistersville Tank Works, Inc.; et al,
No. 22-848, Supreme Court of Appeals of West Virginia (November 8, 2023)
the Court answered the question. The Supreme Court answered the
question with the conclusion that a "continuous-trigger" theory applies
to the policy, as the policy is ambiguous as to when coverage is
triggered.
OPINION
The gateway to coverage under every standardized, commercial general
liability (or "CGL") policy issued in the United States since 1966 is
proof that a bodily injury or property damage has "occurred."
FACTUAL BACKGROUND
Sistersville Tank Works ("STW") has, since late 1984, been a
family-owned and -operated West Virginia corporation. STW manufactures,
installs, and repairs various types of tanks at industrial sites
throughout world, including at several chemical plants in West Virginia.
At different points in 2014, 2015, and 2016, three men were diagnosed
with various forms of cancer. In 2016 and 2017, the "claimants" (the men
with cancer and/or their spouses) sued STW in three separate lawsuits
in West Virginia state courts. The claimants alleged the cancers were,
in some part, caused by STW's tanks.
STW asked Westfield to provide a defense and indemnification to the
three lawsuits under its previously purchased CGL policies. Westfield
denied coverage under its CGL policies for the three suits and, in June
2018, filed a complaint against STW for declaratory relief and after
discovery, the parties filed competing motions for summary judgment.
The Supreme Court had never addressed the question raised before the
district court. Nevertheless, the district court calculated that this
Court would apply the continuous-trigger theory to clarify the ambiguous
language in Westfield's policy.
DISCUSSION
Occurrence-based CGL policies provide coverage if the event insured
against takes place during the policy period, irrespective of when a
claim is presented. The certified question raises a different, more
complicated set of circumstances. Westfield contends that manifestation
of a disease is the sole trigger of coverage under its occurrence-based
CGL policies.
The Policy Language Supports A Continuous Trigger
The reasoning of the Supreme Court’s recognition of the continuous
trigger of coverage has the effect of spreading the risk of loss widely
to all of the occurrence-based insurance policies in effect during the
entire process of injury or damage. As one court said, the continuous
trigger theory is the most efficient doctrine for allocation of
liability amongst insurers for toxic waste cases, because it encourages
all insurers to monitor risks and charge appropriate premiums.
Therefore, an occurrence based CGL policy covers all injuries,
sicknesses, or diseases that occur during coverage, not merely those
that become manifest.
s
ZALMA OPINION
It is axiomatic that when a court finds an ambiguity in an insurance
policy it must be interpreted in favor of coverage for the insured. West
Virginia found the policy was ambiguous as to trigger and therefore,
overruling a strenuous dissent, and applied the continuous trigger
expanding the coverages available to STW for the claims of the
plaintiffs that STW was responsible for the illnesses because under the
continuous-trigger theory of coverage every moment from the first
exposure to the harmful chemicals up to and including the date of
diagnosis would be covered by Westfield's policy.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
