Kenneth S. Abraham

"Second Generation" Issues in Environmental Liability Insurance Litigation

Environmental Claims Journal

UVA Law Faculty Affiliations


During the past several years environmental liability insurance litigation has continued to pose a series of challenging and complex issues. Yet many of the central issues that arise in environmental insurance coverage disputes remain unresolved. For example, few state supreme courts have ruled definitively on what might be called the "first generation" of issues that were raised in this litigation: the meaning of the term "damages" in the standard Comprehensive General Liability (CGL) insurance policy, the application of the "pollution exclusion" in that policy to gradual pollution that results in unexpected harm, the scope of the "owned-property" exclusion, and the appropriate trigger of coverage to be applied in hazardous waste cleanup claims. Several more years may elapse before a firm trend on these coverage issues begins to emerge, if indeed a trend does emerge. While policyholders and insurers litigate these first generation issues and await trends in their resolution, we have entered a second decade of this litigation, and a "second generation" of coverage issues has begun to arise.

These second generation issues have arisen for two reasons. First, it was inevitable that as coverage litigation matured a numberof issues that had not been clearly recognized from the outset would emerge. Another reason, however, is that both insurers and policyholders can raise them as part of an effort to neutralize or avoid the effects of adverse resolutions of first generation issues. As the shape of possible judicial reactions to the damages, pollution exclusion, owned-property, and trigger questions has become more clear, counsel have begun to anticipate these reactions in ways that have raised a second generation of coverage issues.

Three of these are of particular significance: (1) the meaning of the limitation on coverage of liability for harm that was "neither expected nor intended" by the insured; (2) whether and when insurers may be bound by previously-taken positions that are inconsistent with the denial of coverage of current claims; and (3) the extent to which megacoverage disputes should be consolidated and resolved in a single proceeding or fragmented and litigated on a piecemeal basis in multiple jurisdictions. Of course, in characterizing these as second generation issues I am painting with a broad brush. The issues have been raised-at least in some cases-almost from the inception of the megacoverage litigation of the 1980s. Until recently, however, few litigants or courts have been preoccupied by these issues. Moreover, although the arguments that may be employed on both sides of the first generation coverage issues are now well developed, the same cannot be said of the second generation issues. There is much more room for creative attorneys to contribute new arguments to the debate over these second generation issues and thereby to further their clients' interests.



Kenneth S. Abraham, "Second Generation" Issues in Environmental Liability Insurance Litigation, 3 Environmental Claims Journal 309-325 (1991).

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