Insurance Group Wins Major Decision in $1.85 Billion Coverage Case
Riker Danzig’s Insurance team, led by Shawn Kelly, secured a major decision for client TIG Insurance Co. in IMO Industries v. Transamerica over $1.85 billion in coverage for asbestos claims. The New Jersey Superior Court, Appellate Division, rejected a group of excess insurers’ appeal from a verdict that held them liable for providing coverage to IMO Industries for personal injury claims related to asbestos exposure.
IMO, a manufacturer of industrial machinery, was faced with thousands of personal injury claims related to the manufacturing of products in the 1940’s through the 1980’s that contained asbestos. After tens of millions of dollars had been paid by IMO’s primary carriers, in 2003 IMO sued it primary carriers and later added its excess carriers as additional claims were filed.
The Appellate Court considered the amount of coverage IMO was entitled to, how that coverage should be allocated between the carriers, and for what period primary insurers must cover defense costs.
In the ruling, the Court upheld the lower court’s decision that the excess carriers must pay the defense costs of IMO in its underlying cases, and also rejected the carriers’ attempt to reduce the amount they collectively owed, finding that multiyear policies provide separate per-occurrence limits for each year of coverage. The Court said that allowing excess carriers to contest coverage “is not feasible for long-tail, multi-claim coverage cases,” and that to revisit settled claims for reallocation purposes would “greatly complicate the already complex allocation process.”
As discussed in a New Jersey Law Journal article about the decision, Shawn explained, “This decision is significant both because of the finding that there is no right to a jury trial because of the predominance of equitable issues combined with the complexity of the subject matter, and because of the finding as to how an insurer exhausts policies.” He added that the IMO case will carry forward the principles of Owens-Illinois and Carter-Wallace in how courts will decide allocation issues.