On January 29, 2009, the Wisconsin Supreme Court released its decision in Plastics Engineering Co. v. Liberty Mutual Insurance Co., 2009 WI 13. This case involves the availability of insurance under the primary and excess liability policies of Liberty Mutual for multiple claims that the insured, Plastics Engineering Co. (“Plenco”) was facing alleging bodily injury due to exposure to asbestos containing products manufactured by Plenco.
The case was certified to the Wisconsin Supreme Court from the United States Court of Appeals for the Seventh Circuit to address three issues: (1) what constitutes an “occurrence” in an insurance contract when injuries are sustained by numerous individuals at different times and places over many years; (2) whether Wisconsin Statute §631.43(1) applies to successive insurance policies; and (3) whether Wisconsin courts would adopt an “all sums” or pro rata allocation methodology to apportion losses between and among multiple, successive insurance policies over a long period of time.
The Court concluded that each claimant’s exposure is a separate occurrence and that §631.43, Wis. Stats. does not apply to successive insurance policies. The Court also rejected the pro rata allocation methodology in favor of an all sums approach whereby Liberty Mutual must fully defend and indemnify its insured for all sums up to the policy limits that Plenco is obligated to pay because of the injuries.
The Court’s ruling will have significant impact on a policyholder’s ability to recover from its insurers for bodily injury or property damage claims arising from exposure to harmful substances or the release of hazardous substances that contaminate the environment. The Court’s decision to apply an all sums allocation methodology will improve and enhance the availability of insurance coverage for these types of claims.