New Jersey courts have been very active this quarter in the area of environmental insurance coverage litigation. The following are some of the more noteworthy developments:
ú No right to a jury trial exists in a declaratory judgment action brought by an insured against its insurer for breach of the insurance contract and future remediation costs. Ciba-Geigy Corp. v. Liberty Mutual Insurance Co. and GEI International Corp. v. St. Paul Fire & Marine Insurance Co. (New Jersey Supreme Court).
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Applying the continuous trigger approach, the triggered coverage period commences when a contaminant is first released and terminates upon discovery of the release. If and when a triggered policy contains an absolute pollution exclusion, however, the trigger period immediately terminates as a matter of law. Princeton Gamma- Tech v. Hartford Insurance Group (Law Division, Somerset County).
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The horizontal loss allocation method, requiring exhaustion of all primary coverage before excess coverage is triggered, is rejected in favor of the pro rata allocation method, where all triggered insurers, including primary and excess, are held liable for a prorated share of the loss based upon the amount of time each was on the risk and the degree of risk each assumed. Carter-Wallace v. Admiral Insurance Co. (Appellate Division).
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Insurers act in bad faith when they fail to adequately investigate insureds' claims, decline to defend insureds for unsupportable reasons, unreasonably delay coverage determinations and cite spurious reasons for denying indemnification. Such bad faith warrants the award of compensatory and punitive damages to insureds. Princeton Gamma-Tech v. Hartford Insurance Group (Law Division, Somerset County).
