New Jersey Supreme Court Hears Arguments on Coverage Gap Dispute

On Tuesday, October 24, the New Jersey Supreme Court heard arguments in a 17-year-old battle between Honeywell International Inc. (Honeywell) and two excess insurers, St. Paul Fire and Marine Insurance Co. (St. Paul) and parent Travelers Casualty and Surety Co. (Travelers) over whether Honeywell will have to help cover the costs of asbestos-related injury suits that were filed against it after insurers began to universally exclude coverage for asbestos-related liabilities in 1987.

At issue is the application of the so-called unavailability doctrine. Under this doctrine, liability for continuous injuries is allocated between insurers on a pro rata basis based on the degree of risk assumed and the amount of time each policy was on the risk. If a policyholder did not purchase insurance for a particular risk for some period during the continuing injury, it must cover a portion of the liability as if it was the insurer during that period.  However, if no insurance for that risk was available, the unavailability exception applies and the policyholder is not required to contribute.

This case contains an interesting wrinkle: the insurers argue that the doctrine should not apply because Honeywell’s predecessor continued to manufacture asbestos products after the dangers of asbestos were well known.

To read more about the arguments in this case, view the case alert here.

Austin Moody-1 for web

Oct 26, 2017
Austin D. Moody

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