Case Briefs

Court Determines Appropriate 'Trigger' for Pollution Damage Coverage

The New Hampshire Supreme Court recently resolved the question of what “trigger” would be used to determine whether a comprehensive general liability policy covered pollution damage. Energynorth Natural Gas, Inc v. Underwriters at Lloyd's, ___ A.2d ___, 2004 WL 868282 (N.H. Apr. 23, 2004).

Energynorth began the case in federal court and sought a declaration that the entities that insured Energynorth's predecessor companies between 1958 and 1983 were obligated to pay for the costs of remediation ordered by the New Hampshire Department of Environmental Services. The alleged contaminants were released before 1952, and supposedly migrated through soil and groundwater between 1958 and 1983. Id. at *1. The federal district court concluded that the question of what “triggered” a policy during a particular period was unresolved under New Hampshire law and therefore certified the question to the New Hampshire Supreme Court. See Energynorth Natural Gas, Inc. v. Underwriters at Lloyd's, No. Civ. 97-064M, 2003 WL 1193060, at *2, *5 (D.N.H. Mar. 13, 2003).

New Hampshire's highest court considered liability contracts with three different types of wording. Energynorth, 2004 WL 868282, at *2. The “occurrence-based” policies contained two slightly different formulations, both of which provided insurance for accidents that resulted in property damage “during [the] policy period.” Id. at *3. The court concluded that, under those wordings, the policies were only triggered if an “injury-in-fact” occurred during the policy period, and “where the alleged contamination and property damage are continuing,” the “'injuries-in-fact' triggering coverage are also continuing.” Id. at *5.

The court reached a different conclusion for wordings that applied to “accidents occurring [or, "which occur"] during the policy period.” Id. at *6. Under those terms, “the accident must occur within the policy period; the resulting damage, however, does not … ” Id. Concluding that the word “accident” does not imply a “single, discrete event,” the court then found that these particular policies were triggered by each “exposure” to the toxic waste and that, “where the alleged migration of toxic wastes is continuing, multiple exposures triggering coverage are also continuing.” Id.

Finally, the court considered an occurrence-based wording that provided coverage for “occurrences happening during the currency hereof.” Id. at *9. The court interpreted the term “occurrence” as being similar to the term “accident,” meaning that the term occurrence was not limited to the concept of a single discrete event. Consequently, under the terms of this particular insurance contract, coverage was triggered by “exposure,” which could be continuing where the migration of waste was a continuing event. Id.

Court Determines Appropriate 'Trigger' for Pollution Damage Coverage

The New Hampshire Supreme Court recently resolved the question of what “trigger” would be used to determine whether a comprehensive general liability policy covered pollution damage. Energynorth Natural Gas, Inc v. Underwriters at Lloyd's , ___ A.2d ___, 2004 WL 868282 (N.H. Apr. 23, 2004).

Energynorth began the case in federal court and sought a declaration that the entities that insured Energynorth's predecessor companies between 1958 and 1983 were obligated to pay for the costs of remediation ordered by the New Hampshire Department of Environmental Services. The alleged contaminants were released before 1952, and supposedly migrated through soil and groundwater between 1958 and 1983. Id. at *1. The federal district court concluded that the question of what “triggered” a policy during a particular period was unresolved under New Hampshire law and therefore certified the question to the New Hampshire Supreme Court. See Energynorth Natural Gas, Inc. v. Underwriters at Lloyd's, No. Civ. 97-064M, 2003 WL 1193060, at *2, *5 (D.N.H. Mar. 13, 2003).

New Hampshire's highest court considered liability contracts with three different types of wording. Energynorth, 2004 WL 868282, at *2. The “occurrence-based” policies contained two slightly different formulations, both of which provided insurance for accidents that resulted in property damage “during [the] policy period.” Id. at *3. The court concluded that, under those wordings, the policies were only triggered if an “injury-in-fact” occurred during the policy period, and “where the alleged contamination and property damage are continuing,” the “'injuries-in-fact' triggering coverage are also continuing.” Id. at *5.

The court reached a different conclusion for wordings that applied to “accidents occurring [or, "which occur"] during the policy period.” Id. at *6. Under those terms, “the accident must occur within the policy period; the resulting damage, however, does not … ” Id. Concluding that the word “accident” does not imply a “single, discrete event,” the court then found that these particular policies were triggered by each “exposure” to the toxic waste and that, “where the alleged migration of toxic wastes is continuing, multiple exposures triggering coverage are also continuing.” Id.

Finally, the court considered an occurrence-based wording that provided coverage for “occurrences happening during the currency hereof.” Id. at *9. The court interpreted the term “occurrence” as being similar to the term “accident,” meaning that the term occurrence was not limited to the concept of a single discrete event. Consequently, under the terms of this particular insurance contract, coverage was triggered by “exposure,” which could be continuing where the migration of waste was a continuing event. Id.