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Vol. 7 - Issue 7
September 26, 2018

Judge Tells An Asbestos Riddle (Really)
You could fill a library with the amount of paper that has come out of courts in the past three-plus decades addressing insurance coverage for asbestos injuries and damage. I’d bet that nowhere in that trove is an asbestos riddle. But that’s what the court in Midwest Family Mut. Ins. Co. v. Justkyle, Inc., No. 17-1632 (D. Minn. July 19, 2018) gave us: “The question presented in this case sounds something like a bad riddle: ‘When is an asbestos case not an asbestos case?’ The punchline sounds even worse: When a portion of the property damage alleged against a third-party defendant in the underlying action is not inarguably and clearly a natural and reasonable consequence of the existence of, or presence of, asbestos.”

Court Declines To Apply Pollution Exclusion’s “Heating Equipment” Exception
In Colony Ins. Co. v. Great Am. Alliance Ins. Co., No. 17-62467 (S.D. Fla. July 17, 2018) the court held that a pollution exclusion barred coverage for the death of two individuals on account of exposure to carbon monoxide in a condominium unit. The court had little trouble concluding that carbon monoxide is a pollutant and the pollution exclusion precludes coverage for such claims (as Florida courts have consistently held). The question arose whether the “heating equipment” exception to the pollution exclusion applied: “‘Bodily injury’ if sustained within a building which is or was at any time owned or occupied by, or rented or loaned to, any insured and caused by smoke, fumes, vapor or soot produced by or originating from equipment that is used to heat, cool or dehumidify the building, or equipment that is used to heat water for personal use, by the building’s occupants or their guests . . .” The court held that it did not: “[T]he fact that the carbon monoxide entered the unit through the A/C ducts or vents does not mean that the carbon monoxide was produced by, or originating from, the ducts or vents. The CO originated from and was produced by the motor vehicle [left running in the garage].”

High Court Addresses Interesting “Other Insurance” Issue
In Nat’l Cas. Co. v. Ga. Sch. Bds. Assn., No. S18Q0757 (Ga. Aug. 14, 2018), the Supreme Court of Georgia answered the following certified question from the Northern District Of Georgia: “When an insurance policy issued by a commercial company has a provision that states that the policy is excess to the liability of another insurer overlapping coverage and that provision conflicts with the excess coverage provision in an insurance agreement issued by an agency created under OCGA § 20-2-2002, does the irreconcilable provision rule as set forth in State Farm Fire & Cas. Co. v. Holton, 131 Ga. App. 247 (205 SE2d 872) (1974), require each insurer to pay a pro rata share of the loss?”

The court answered Yes. In doing so, the court rejected the argument that the insurance created by the statute – a risk pool comprised of boards of education – is excess on account of the public policy of protecting the public purse: “[T]here is no apparent public policy which would be furthered by the requirement that commercial insurance funds be exhausted before the legislatively mandated public funds set aside to protect education professionals against employment-related liability are used. In fact, the bedrock public policy of freedom of contract would be frustrated if there were such a requirement. In addition, insurance policies are not only a matter of contract, they are ‘also a matter of public concern because rulings in cases involving common policies obviously affect risk and associated insurance rates at a mass level.’ Mass. Mut. Life Ins. Co. v. Woodall, 304 F. Supp. 2d 1364 (S.D. Ga. 2003). Rendering meaningless the bargained-for ‘other insurance’ provisions contained in commercial insurance policies in favor of contemplated publicly funded sources of insurance based on a public policy requiring the exhaustion of all commercial funds would interfere not only with an insurance company’s freedom to contract with its insureds but also undoubtedly adversely affect the premiums paid for liability policies to protect the education professionals of this State.”


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