Evidence Supporting Policyholders in Insurance Coverage Disputes

allegedly caused by asbestos and environmental contamination as well as environmental cleanup liabilities under statutes such as the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), often referred to as the Superfund law. This insurance coverage litigation typically arises under comprehensive general liability (CGL) insurance policies which businesses purchase to protect themselves from a wide range of liabilities. CGL policies generally are issued using standard policy forms that have been developed by nationwide insurance industry organizations. Thus, CGL policies issued by virtually all insurers contain identical problems of interpretation problems that become pronounced when the policies are applied to delayed manifestation claims. Insurance policies are contracts, which tempts many lawyers for policyholders to rest upon the policy language and legal arguments as to its meaning in presenting their clients' coverage claims. A growing body of decisions makes clear, however, that this narrow approach may not be adequate and may lead a court to overlook substantial evidentiary support for the policyholder's interpretation of his insurance policy. This article will discuss some of the principles of insurance policy interpretation that courts use to determine coverage under CGL policies for delayed manifestation claims, paying particular attention to the types of facts that courts have relied on in ruling for policyholders. It also will discuss the drafting history of some standard-form clauses, much of which supports policyholders' coverage positions. The principles and evidence discussed in this article apply to coverage both for toxic torts and for CERCLA-type environmental cleanup liabilities. It is worth noting, however, that insurance companies often treat these two types of claims differently. Insurers are more likely to agree that their policies cover toxic tort claims than statutory environmental cleanup claims. One policy provision sometimes used to support this distinction is the pollution exclusion clause, which is discussed later in this article. Other provisions that allegedly support the distinction are beyond the scope of this article. Courts have developed several rules for interpreting insurance policies that help policyholders seeking to enforce insurance coverage for delayed manifestation claims. Some of these rules rely upon facts presented in the policyholders' favor, and all require the forceful presentation of legal argument. Chief among these is the rule, recognized in virtually all states, that ambiguous policy terms are construed against the insurer. Policyholders regularly cite this rule because policy ambiguities become apparent when one attempts to apply CGL policies to delayed manifestation claims. This rule recognizes the fact that the insurer drafted the standard-form policy language and could have chosen provisions that would have applied clearly. For a policyholder, convincing the court th t a term is ambiguous may mean the difference between establishing or failing to establish coverage. Generally, courts will hold an insurance policy term to be ambiguous if it can have two meanings. When a term is undefined in the policy, some policyholders have demonstrated ambiguity by presenting to the court dictionary definitions of the term that are broader than the