Insurers Win First Round of Climate Change Coverage Litigation

[The Straight Story]

snip

For these reasons, insurers were undoubtedly gladdened when the Virginia Supreme Court recently issued its much anticipated opinion in Steadfast Insurance Company v. The AES Corporation, the first climate change coverage case to be decided, and affirmed the lower court’s judgment declaring that Steadfast had no duty under the CGL policy issued by it to defend its insured, AES Corporation, against climate change related claims.

But, while a win is better than a loss, the Virginia Supreme Court rested its decision on narrow grounds specific to the case before it and did not address those defenses of Steadfast which would have had a much broader application. As a result, it is unclear how helpful the decision will be to insurers facing coverage issues in future climate change litigation.

...

Consistent with these lawsuits, in Village of Kivalina v. ExxonMobil, the residents of the Alaskan city of Kivalina sued numerous oil and energy companies, including AES Corporation, asserting that the defendants’ excessive emissions of carbon dioxide and other greenhouse gases were and are causing global warming, resulting in the loss of Arctic sea ice that protects the Kivalina coast from winter storms. AES sought defense of this claim under a CGL “occurrence” policy issued to it by Steadfast Insurance Company. Steadfast agreed to defend under a reservation of rights, but filed suit in Virginia seeking a declaratory judgment that it had no duty to defend AES in the Village of Kivalina lawsuit.

...

The Village of Kivalina complaint alleged that AES “intentionally” released “tons” of greenhouse gases into the atmosphere. The Court noted that intentional acts are not “accidents,” but that an injury resulting that was out of the ordinary expectation of a reasonable person could nonetheless be covered under an “occurrence” insurance policy even though the insured’s action starting the chain of events was intentional.

http://www.insurancejournal.com/news/national/2011/11/29/225478.htm