Did you know that insurance coverage issues can arise from events that took place over 100 years ago?
The Long Island Lighting Company (“LILCO”), now owned by National Grid, has been involved in a coverage battle with its insurer, Century Indemnity, since 1997 over coverage for pollution resulting from its Community Gasworks Facilities, all of which were closed by 1930. The facilities, which produced coal gas for lighting, created coal tar as a byproduct of the manufacturing process. Although the company knew the dangers of disposing the tar in water, it was not aware of the harmful effects of disposing of it in the ground, where it leached into the groundwater continuously over the course of decades.
When LILCO became aware of the pollution, it began proactively working to mitigate liability. LILCO gave notice to Century when it became aware that state regulations had developed to a point where some liability could reasonably be expected. Century asserted that there was no coverage, because of this delay in providing notice. The court recently sided with LILCO, finding that a jury could have rationally found that LILCO provided timely notice. It also found for LILCO on the issues of allocation of liability over multiple policy years and progressive property damage.
This case underscores the potentially long-ranging insurance implications of pollution liability. Decisions made by your company, its predecessors, or its subsidiaries, can drag you into expansive and costly litigation. If you find yourself in, or potentially in, a situation where you could be facing pollution liability, make sure you consult with an experienced professional who knows how to ensure that the coverage you purchased will be available to you if you face liability.
The most recent decision in the case is Keyspan Gas E. Corp. v. Munich Reins. Am., Inc., 2016 N.Y. Misc. LEXIS 839 (N.Y. Sup. Ct. 2016), although there have been many decisions over the course of this litigation.
May 02, 2016
William S. Bennett