Your CGL Policy May Cover More Than You Think – Damages “because of’ Property Damage or Bodily Injury for Construction Projects

Stella Szantova Giordano | Saxe Doernberger & Vita

Construction projects are susceptible to injuries and property damage – which is why the stakeholders involved rely heavily on commercial general liability (“CGL”) insurance policies when such losses occur. While many insureds are familiar with pursuing insurance coverage for bodily injury and property damage, a CGL policy can also cover certain consequential damages if they can be characterized as damages “because of” property damage or bodily injury.

Imagine the following scenario: An employee falls from scaffolding at the project site. OSHA shuts down the site for investigation of safety issues, and no trades are allowed to return to work for a month. Because of this, the project schedule falls behind, and the owner and the GC suffer extensive delay damages. The question is: can these (and similar) consequential damages be covered as “because of” damages under a CGL policy.

How does “because of” coverage work?

The key language to access the “because of” damages coverage is in the insuring agreement of every CGL policy written on the post-1973 ISO coverage form CG 00 01. Section I.A(1) reads:

(a) We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies.2

Because the highlighted phrase can be interpreted very broadly, many courts have concluded that a CGL policy covers certain damages flowing from a bodily injury and property damage if the following is true: 1) there is a bodily injury or property damage for which the CGL policy provides coverage; 2) the sought damages were incurred “because of” such bodily injury or property damage; and 3) the connection between the bodily injury or property damage and the “because of” damages sought is not too attenuated.3

As for the third element, any degree of “but for” causation can be construed to provide coverage, since “because of” damages can (and very often are) far broader than property damage or bodily injury itself. Exactly how closely related the losses for which coverage is sought must be related to the underlying bodily injury or property damage will vary from case to case, but a good rule of thumb is the closer related to the underlying bodily injury or property damage, the better.

What types of damages can be covered?

Theoretically, any damages which can be described as damages “because of” bodily injury or property damage could be covered. However, case law on this type of coverage is limited so a creative argument, matching your particular circumstances, may be needed. Courts found “because of” coverage for these types of damages stemming from underlying property damage: 1) delay costs (California, Illinois, Michigan, Texas, Washington and Wisconsin); 2) liquidated damages (Texas and Pennsylvania); and 3) diminution of value (Missouri and Texas).

Delay Costs. If construction is halted and delayed “because of” property damage, associated costs can be very expensive. Examples of covered losses include: a 131-day delay in completion of a California residential project because of water intrusion property damage4; and delay costs associated with re-engineering and rip-and-tear damages stemming from a subcontractor’s failure to construct concrete piles to their required strength in Washington.5

Liquidated Damages. Because liquidated damages are considered to be contract-based, obtaining coverage for them under the “because of” theory can be more difficult. The key distinction is whether the damages are a result of the insured’s negligence (in which case they are covered), or whether the damages arise from a contractual obligation (in which case they are not). A federal court applying Texas law allowed coverage for liquidated damages of $5,400 per day resulting from damage to an oil pipeline.6 A court in Pennsylvania found that liquidated damages “because of” a subcontractor accidentally cutting structural parts of a bridge were covered.7 Finally, a Tennessee court explained that if the insurers wanted to protect themselves from coverage for liquidated damages as “because of” damages, they could specifically endorse their policies to exclude liquidated damages.8

Diminution of Value. In and of itself, diminution in value is a purely economic loss not considered property damage. However, if it stems from underlying property damage, “because of” coverage is available. One court, applying Missouri law, allowed “because of” coverage to a supermarket for diminution in value to its building because of improperly installed and cracking terrazzo floor.9 Another court in Texas allowed coverage for diminution in value caused by water leakage from developer-made lakes to individual homes.10

NOTE: Many states also allow coverage for ensuing damage arising out of defective construction. While some cases characterize this as “because of” coverage, seeking defective construction coverage usually involves a different analysis which is beyond the scope of this article.11

Damages “because of” bodily inury may be more limited

Very few cases address coverage for consequential damages “because of” bodily injury on a construction project, but the argument should be the same as with damages flowing from property damage. One notable New York case allowed “because of” damages coverage for a project owner whose employees slipped and fell on water which came from an improperly installed (and leaking) roof.12 In addition, cases from non-construction settings can be used as guidance when seeking damages “because of” bodily injury. For example, a Maryland case allowed compensatory damages (including purchase of a cell phone head set) to individuals injured by cell phones emitting dangerous levels of radiation.13 In any case, the argument that damages “because of” bodily injury (such as the delay costs in the hypothetical scenario mentioned earlier) should be covered by a CGL policy is often worth making.


If you find yourself faced with consequential damages on a construction project caused by property damage or bodily injury, you should consider whether the “because of” argument could get you additional recovery under a CGL policy. Coverage counsel can help you evaluate whether damages such as delay in completion, repair costs, liquidated damages or diminution in value could be covered.

CGL Coverage and Coronavirus: Is Causing Exposure an “Occurrence”?

Randy Maniloff and Margo Meta | White and Williams

There is only one thing that can be said for sure about the extent of consequences — human and economic — of the new coronavirus outbreak. Nobody knows. But, as things stand now, minor, and even moderate, have left the barn.

History shows that, in the wake of widespread injuries and financial losses, focus often turns to the possible role of insurance to mitigate the damages. The new coronavirus — COVID-19 — will be no exception. Indeed, lots of lawyers have already published articles discussing the issue. History also teaches that, when novel claims arise, not everyone sees eye-to-eye on if or how insurance policies apply.

As policyholder lawyer Kirk Pasich put it in The Wall Street Journal last week: “There is no guesswork here: There will be insurance-coverage disputes.” He added that “[t]here is so much money at stake and strong differences of opinions as to whether insurance applies.”

Most of the coronavirus-insurance chatter so far has focused on possible coverage under business interruption policies. That makes sense. A business that has suffered a financial downturn, on account of the impact of the virus, would certainly describe it as an “interruption.” But Business Interruption policies typically require that there be direct physical loss of or damage to the insured property. And most business losses will likely be the result of a general decline in economic activity and not physical loss or damage to a structure.

But expect to see disputes over satisfaction of this requirement if a business is disrupted because the virus was present on its premises, say, in the HVAC system. Some policyholder-counsel are already beating this drum.

Other potential business interruption issues being bantered-about involve coverage for the consequences of supply chain disruptions and if a business is closed on account of a government mandate.

Coverage questions are likely to arise under a variety of other policies, including event cancellation. The Wall Street Journal reported that the South By Southwest festival in Austin is uninsured for its cancellation as its policy does not cover a shut-down caused by a disease.

According to the Journal, on account of its losses, the future of the mega-gathering is up in the air. The Chief Executive of SXSW told the paper: “We’ve had to show our insurance policy to all kinds of people, and nobody ever said, ‘Hey, there’s a big hole here.’”


Another history lesson: Injuries and financial losses are often followed by an assessment of blame. This is the tort system. Enter the plaintiffs’ lawyers. Some in the business of seeking compensation, for those that have been harmed, may be thinking that someone must pay for all this chaos.

Of course nobody here can expect to be sued for causing the coronavirus. But the same may not be said for those who allegedly failed to prevent others from becoming infected. Consider schools that did not close and its students became infected, conferences that did not cancel, stores and restaurants that should have shut down, sporting events that should not have gone on. The list is long. Some businesses, and employees, may be forced for reasons of economic necessity — survival even — to put financial interests ahead of safety.

Consider the suit filed on March 9th by Ronald and Eva Weissberger, passengers on the Grand Princess cruise liner, which was docked off the coast of California for several days on account of passengers and crew infected by the coronavirus. In their California federal court complaint, the couple alleges that Princess Cruise Lines had actual knowledge that two passengers, who had previously disembarked, had symptoms of the coronavirus. In addition, 62 passengers now on board were allegedly exposed to them. Yet, despite all this, the suit alleges that the ship still sailed, on account of the cruise liner choosing “to place profits over the safety of its passengers.”

Needless to say, there will be proximate cause challenges to tying one’s infection to another’s conduct. After all, the exposure could have happened in umpteen locations. There will also be duty of care issues that look at whether the business satisfied its obligations to invitees or others on the premises.

Such suits would presumably be reserved for those seriously injured or who succumbed to the virus. [Think egg-shell plaintiff for those who died and had other underlying illnesses.] So far that is not most people. Although those with minor injuries may still want lost wages, which is because of bodily injury. So how prevalent these suits are remains to be seen. But ruling them out entirely would be premature.

And what about if one’s conduct, in conjunction with taking coronavirus measures or not, causes another business to shut down. [The CGL definition of “property damage” usually includes “loss of use” of property.]


Claims that seek to hold people responsible for causing others to contract coronavirus will put insurance in the spotlight. A business facing such a suit will turn to its commercial general liability policy. Despite the availability of defenses against these premises liability claims, the duty to defend does not consider the merits of the suit.

How might insurers respond to such suits?

Many CGL policies contain a Fungi or Bacteria exclusion. While it is often colloquially called the Mold exclusion, is it more than that. The endorsement typically also excludes coverage for “bodily injury” “which would not have occurred, in whole or in part, but for the actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of, any bacteria on or within a building or structure,” et seq. But COVID-19 is a viral infection and not bacterial.

There is a liability policy exclusion for communicable diseases. In Koegler v. Liberty Mutual Insurance Company, 623 F. Supp. 2d 481 (S.D.N.Y. 2009), the court held that no liability coverage was owed to an individual, for claims that he transmitted the human papillomavirus and herpes virus to his girlfriend and her daughter. The court held that the communicable disease exclusion, which excluded coverage for bodily injuries arising out of the “transmission of a communicable disease, virus, or syndrome,” precluded coverage. But the Communicable Disease exclusion is not seen often in CGL policies.

The pollution exclusion? Policyholders will maintain that, even states that apply it broadly, won’t go that far.


While the possible role of exclusions come to mind, they are only reached if a claim first satisfies the relevant terms of the policy’s insuring agreement: “bodily injury” caused by an “occurrence,” usually defined these days as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”

And that’s where the fight over the availability of general liability coverage, for insureds that allegedly caused others to contract coronavirus, is likely to take place: the gateway to the policy, its insuring agreement. Was the “bodily injury” caused by an “occurrence”/accident? [Coverage B — “personal and advertising injury” — does not require an “occurrence.” But only false detention or imprisonment — think wrongful quarantine — would seem relevant here.]

In general, whether there has been an accident, for purposes of securing insurance, is the oldest and most litigated of all coverage issues. The first “accident” coverage case that I know of goes back to 1835 — Howell v. Cincinnati Insurance Company (Ohio Sup. Ct.).

An interesting “accident” case from way, way back is Schneider v. The Provident Life Insurance Company (Wis. 1869). A man was killed when he fell under a slow moving train while attempting to board it. The push and pull in Schneider, over whether his death was caused by an “accident,” reads like the opinion was written last week. When an issue has been debated for nearly 200 years, and the arguments haven’t changed much, it would be fair to call it vexing.

There may be no better description of this confounding issue than how it was put by the Pennsylvania Supreme Court in Brenneman v. St. Paul Fire & Marine Insurance Company (1963). Nearly 60 years ago Justice Musmanno made this observation:

What is an accident? Everyone knows what an accident is until the word comes up in court. Then it becomes a mysterious phenomenon, and, in order to resolve the enigma, witnesses are summoned, experts testify, lawyers argue, treatises are consulted and even when a conclave of twelve world-knowledgeable individuals agree as to whether a certain set of facts made out an accident, the question may not yet be settled and it must be reheard in an appellate court.

So is “bodily injury,” on account of an insured’s failure to prevent exposure to coronavirus on its premises, caused by an accident?

At the outset, the standard for determining if bodily injury has been caused by an accident differs substantially between states. Even within states the standards are sometimes all over the board. Throw in that the cases can be wildly different factually. And there also seems to be an element of I-know-an-accident-when-I-see-one in the decisions. Did I mention that courts have been trying to figure out what’s an accident since Andrew Jackson was in the White House?

Liberty Mutual Insurance Company v. Estate of Bobzien, 377 F. Supp. 3d 723 (W.D. Ky. 2019) provides guidance on whether “bodily injury,” on account of an insured’s failure to prevent exposure to coronavirus, was caused by an accident?

Michael Bobzien sued his deceased father, Hugo Bobzien, for various injuries and conditions caused by exposure to second-hand smoke while Michael was a minor living in his father’s house. Hugo was insured under a series of homeowners’ insurance policies issued by Liberty Mutual. Each of the policies defined an occurrence as “an accident, including continuous and repeated exposure to substantially the same general harmful conditions, which results, during the policy period…in ‘bodily injury.’”

In the coverage case, the court concluded that Michael failed to allege an “accident” under the Liberty Mutual policies, as his complaint alleged that: (1) Hugo intentionally smoked in the presence of his children, and (2) Michael’s injuries and conditions were a direct, natural and foreseeable result of Michael’s exposure to second-hand smoke.

The court in the very recent decision of Campanella v. Northern Properties Group, LLC, No. 19-171 (D. Minn. Feb. 28, 2020) saw the accident issue differently. Matthew Campanella rented a residence from Northern Properties. Unfortunately it contained toxic levels of chicken feces. Campanella claimed he contracted histoplasmosis on account of Northern Properties carelessly and negligently failing to clean and maintain the residence. Histoplasmosis is a serious infection caused by a fungus in the environment, particularly in soil containing large amounts of bird or bat droppings.

Northern Properties sought coverage for Campanella’s suit under a CGL policy issued by Auto-Owners. At issue was whether the bodily injury was caused by an “occurrence,” defined as an accident.

As Auto-Owners saw it, no way, no how could Campanella’s injury have been caused by an accident: “[I]t is difficult to imagine any scenario in which the accumulation of chicken feces in a residential dwelling to a ‘toxic level’ due to a failure to clean the premises would be accidental.”

But the court disagreed: “Even if Northern Properties intentionally allowed a toxic build-up of chicken feces on the premises, Auto-Owners cannot point to any facts suggesting that any party foresaw Campanella contracting histoplasmosis. In fact, Auto-Owners admits that ‘most people who breathe in the [histoplasma fungi] spores don’t get sick.’ In other words, Campanella contracting histoplasmosis was unexpected and unforeseen—an ‘accident’ as both Minnesota and Wisconsin have defined it.”

Whether “bodily injury,” on account of an insured’s failure to prevent exposure to coronavirus, is caused by an accident, will generally turn on whether the insured foresaw the claimant’s injury. Given the vast warnings, about the need to take action to prevent exposure to coronavirus — not to mention if the insured had reason to know of a risk — some courts may answer this question in the affirmative and conclude that the bodily injury was not caused by an accident.


For sure there are legal and factual challenges to bringing suits against entities for failing to prevent exposure to coronavirus on their premises. And such hurdles may be what keeps the extent of efforts low.

But the duty to defend determination does not take the merits of a claim into consideration. In addition, while such “bodily injury” may not have been caused by an “occurrence,” that determination may not be possible at the complaint stage based on how the allegations are pleaded. Therefore, insurers may find themselves defending claims that their insureds failed to prevent others from contracting coronavirus.

These are strange times. And coronavirus coverage cases will be strange too. But despite their novelty, insurance coverage jurisprudence has long been in place to sort them out.

New Illinois Supreme Court Trigger Rule for CGL Personal Injury “Offenses” Could Have Costly Consequences for Policyholders

Michael S. Levine and Kevin V. Small | Hunton Andrews Kurth

The Illinois Supreme Court’s recent decision in Sanders v. Illinois Union Insurance Co., 2019 IL 124565 (2019), announced the standard for triggering general liability coverage for malicious prosecution claims under Illinois law.  In its decision, the court construed what appears to be a policy ambiguity against the policyholder in spite of the longstanding rule of contra proferentem, limiting coverage to policies in place at the time of the wrongful prosecution, and not the policies in effect when the final element of the tort of malicious prosecution occurred (i.e. the exoneration of the plaintiff).  The net result of the court’s ruling for policyholders susceptible to such claims is that coverage for jury verdicts for malicious prosecution – awarded in today’s dollars – is limited to the coverage procured at the time of the wrongful prosecution, which may (as in this case) be decades old.  Such a scenario can have costly consequences for policyholders given that the limits procured decades ago are often inadequate due to the ever-increasing awards by juries as well as inflation.  Moreover, it may be difficult to locate the legacy policies and the insurers that issued such policies may no longer be solvent or even exist.  A copy of the decision can be found here.

The Sanders case arose out of the wrongful conviction of Rodell Sanders in 1994 by the City of Chicago Heights (the “City”).  Mr. Sanders sought recompense for, among other things, malicious prosecution through a federal civil rights action against the City.  In September 2016, Mr. Sanders obtained a consent judgment for $15 Million; however, at the time of the wrongful conviction, seventeen years earlier, the City’s only applicable insurance policy provided just $3 million in coverage.  The City contributed another $2 million towards the judgment and, in exchange for Mr. Sanders’s agreement not to seek the $10 million balance from the City, assigned its rights under the policies for the 2012 to 2014 period.

The City’s primary insurer from 2012 to 2014 was Illinois Union Insurance Company (“Illinois Union”).  Starr Indemnity & Liability Company was the follow form umbrella carrier.  The Illinois Union policy provided coverage for Personal Injury arising from an Occurrence during the policy period.  Personal Injury was defined to include “one or more of the following offenses … [f]alse arrest, false imprisonment, wrongful detention or malicious prosecution ….”  (Emphasis added.)

In the coverage dispute, the court observed that the central issue concerned whether the “offense of malicious prosecution” occurred during the insurers’ policy period, which hinged on the interpretation of the undefined term “offense.”  Sanders asserted that the offense took place upon the satisfaction of the final element of the tort claim for malicious prosecution – the exoneration of the plaintiff.  The insurers argued that the focus should be on the requisite act and injury, which occurred at the time of the wrongful conviction, rather than the accrual of a completed cause of action.

The court noted that the parties each proffered competing dictionary definitions of the word “offense.”  According to Black’s Law Dictionary (10th ed. 2014), offered by Sanders, an “offense” means a “violation of the law; a crime, often a minor one.”  Comparatively, the insurers cited Merriam-Webster’s Online Dictionary, which provides that “the term is primarily used to mean something that outrages the moral or physical senses.”  Based on these definitions alone, the term “offense” appears susceptible to two reasonable interpretations and, thus, is ambiguous, entitling the policyholder to the interpretation that favors coverage pursuant to the rule of contra proferentem.

Nonetheless, the court concluded “that the word offense in the insurance policy refers to the wrongful conduct underlying the malicious prosecution.”  The court stated that its ruling was based on “the meaning of the word offense and the contractual requirement that the offense must both happen and take place during the policy period” and that a “malicious prosecution neither happens nor takes place upon exoneration.”  The court further noted that the fact that the policy was an occurrence-based policy weighed heavily in its decision because such a policy “reflects the intent to insure only for the insured’s acts or omissions that happen during a policy period.”  The court stated:

If we were to deem exoneration the trigger for coverage of a malicious prosecution insurance claim, liability could be shifted to a policy period in which none of the acts or omissions giving rise to the claim occurred.  That would violate the intent of the parties to an occurrence-based policy.

The court added that “the language of the policy does not require that the elements of the tort be satisfied” and that it “cannot read into it the requirements of a tort claim for malicious prosecution.”  The court did not discuss the fact that the policy language did not preclude such a reading or how the rule of contra proferentem applied in the context at issue.

The court’s ruling could be problematic for Illinois policyholders seeking “personal injury” coverage under standard form policy wording.  With respect to claims like Sanders’s, the National Registry of Exonerations, which compiles statistics concerning exonerations from wrongful convictions, states that exonerations have grown tremendously since 1989, the first year of the database.  Similarly, jury awards have also generally risen year over year.  These conditions, combined with the tendency of policyholders of yesteryear to procure less coverage than policyholders of today and the uncertainties of even locating or obtaining coverage under legacy policies, creates a perfect storm that could leave the policyholder on the hook for a significant portion of an award for malicious prosecution.  This is especially notable considering that, in light of the Sanders decision, plaintiffs will likely not accept a consent judgment and assignment of rights to pursue coverage from the insurers on the risk at the time of exoneration.

Washington Supreme Court Confirms and Expands General Contractors’ Broad Duty to Provide a Safe Worksite

Ryan G. Foltz | Gordon Rees Scully Mansukhani

Under well-established Washington legal authority, a general contractor has a nondelegable duty to ensure the safety of all workers on a jobsite. First, a general contractor has a general common law duty to maintain a safe workplace. Second, a general contractor has a specific statutory duty to comply with the Washington Industrial Safety and Health Act (“WISHA”). Breach of either of these two duties may lead to direct liability. The Supreme Court in Crisostomo Vargas v. Inland Wash., LLC, 194 Wn.2d 720, 452 P.3d 1205 (2019) addressed a general contractor’s exposure to vicarious liability arising out of a worksite injury caused by the actions or omissions of its subcontractors.

In Vargas, the general contractor subcontracted with plaintiff’s employer to place concrete on the jobsite. Plaintiff and another worker were guiding the placement of concrete from a pump truck. Plaintiff was severely injured when a rubber hose carrying concrete whipped plaintiff in the head, rendered him unconscious, and resulted in a traumatic brain injury.

Plaintiff brought suit against Inland Washington, as well as the pump truck operator and the supplier of the concrete. Plaintiff was unable to directly sue his employer because it was immune from liability under WISHA. Among other claims, plaintiff alleged Inland Washington was vicariously liable for the negligence of the concrete subcontractor, pump truck operator, and the concrete supplier.

Upon hearing Inland Washington’s first motion for summary judgment, the trial court ruled the general contractor was “not vicariously liable” for plaintiff’s injuries. Following a second round of summary judgment motions, the trial court confirmed its previous ruling on vicarious liability, finding no change in the law that would warrant revisiting its earlier ruling.

The Supreme Court reversed the trial court finding Inland Washington was potentially vicariously liable under two theories. “First, a general contractor may not delegate its statutory duty to comply with WISHA.” Vargas, 194 Wn.2d at 738. “[I]f a general contractor delegates its own duties to a subcontractor, the general contractor will be liable for the subcontractor’s breach of that delegated duty.” Vargas, 194 Wn.2d at 738-39. “Second, a general contractor will be vicariously liable for the negligence of any entity over which it exercises control.” Vargas, 194 Wn.2d at 738. ‘The test of control is not the actual interference with the work of the subcontractor, but the right to exercise such control.’ Vargas, 194 Wn.2d at 741. A general contractor’s ‘general supervisory functions is sufficient to establish control.’ Vargas, 194 Wn.2d at 741. However, the court noted a general contractor who retains a right to exercise control will not be vicariously liable unless the plaintiff proves that some entity on the jobsite was negligent in causing injury.

Connecticut Supreme Court Affirms Continuous Trigger and Unavailability Exception, Makes First-In-The-Nation Law Regarding Occupational Disease Exclusion

Paul C. Fuener | K&L Gates | October 28, 2019


Earlier this month, the Connecticut Supreme Court (the “Supreme Court”) finally issued its long-anticipated ruling regarding the Connecticut Appellate Court’s (the “Appellate Court”) landmark 2017 decision in R.T. Vanderbilt v. Hartford Accident and Indemnity Co. (the “2017 Appellate Court Decision”). [1] The Supreme Court adopted in its entirety the Appellate Court’s policyholder-favorable decisions regarding the application of the continuous trigger theory to long-tail asbestos-related bodily injury claims, the application of the unavailability-of-insurance rule to allocation of liability for such claims, and the inapplicability of the qualified pollution exclusion to asbestos-related bodily injury claims.

The Supreme Court’s opinion also contained a potentially problematic ruling for policyholders. Ruling on an issue of national first impression, the Supreme Court held that an occupational disease exclusion in certain of the policyholder’s policies applied not only to claims brought by the policyholder’s own employees but also to all underlying claimants alleging that they suffer from an occupational disease, even if they were employed by others.

The Supreme Court’s Vanderbilt Decision

The Connecticut Supreme Court considered four issues on appeal from the 2017 Appellate Court Decision. [2] Three of those issues were raised by the defendant insurers: (1) whether the continuous trigger theory was properly applied to long-tail asbestos claims under Connecticut law, (2) whether the unavailability-of-insurance rule should be applied to allocation of liability under Connecticut law for long-tail liability claims, and (3) whether under Connecticut law the pollution exclusion applied only to traditional environmental pollution or more broadly to asbestos bodily injury claims. [3]

The policyholder raised the final issue on appeal: whether the occupational disease exclusion was limited to claims brought by the policyholder’s own employees or had broader application. [4]

Trigger, Allocation, and the Qualified Pollution Exclusion

In its 2017 Appellate Court Decision, the Appellate Court placed Connecticut among those jurisdictions that apply the continuous trigger theory to long-tail claims. The Appellate Court’s decision reasoned that this theory best reflected the medical particularities of long-tail asbestos claims and was therefore the most fair and efficient way to distribute costs. [5]

The Appellate Court also adopted the “unavailability-of-coverage” rule to augment Connecticut’s pro rata allocation theory for long-tail claims. Under this rule, no amounts are allocated to a policyholder for years when the policyholder was unable to purchase insurance for third-party asbestos-related bodily injury claims because such insurance was unavailable in the market. [6] In adopting the “unavailability-of-coverage” rule, the Appellate Court rejected the insurers’ attempt to include an “equitable exception” to the rule that would have made the rule inapplicable to periods during which a policyholder sold allegedly asbestos-containing products. It also rejected the insurers’ suggestion that the alleged availability of coverage for asbestos liabilities under “claims-made” policies should be factored into the question of whether coverage for asbestos-related bodily injury claims was “available” in the market. [7]

Finally, the Appellate Court held that the so-called “qualified” pollution exclusion (also referred to as the “sudden and accidental” pollution exclusion) only applied to traditional environmental pollution. [8] The Appellate Court reasoned that the meaning of “environmental pollution” was clear at the time the insurers drafted the exclusion and referred to traditional methods of environmental pollution, such as unintentional migration of a pollutant through a water source. [9] The Appellate Court held, therefore, that this exclusion does not apply to asbestos-related bodily injury claims. [10]

On appeal, the Supreme Court agreed with the Appellate Court’s reasoning and conclusions with respect to these three issues and adopted in full the Appellate Court’s discussion of them without further elaboration. [11]

The Occupational Disease Exclusion

In considering the scope of the occupational disease exclusion, the Supreme Court, after summarizing the discussion of the issue below, began by making an independent inquiry into the plain meaning of the term “occupational disease.” [12]

Looking first to the language of the exclusion in the relevant policies, the Supreme Court noted that neither defined the term “occupational disease,” thus requiring the court to turn to the plain meaning of the term when the policies were written. [13]

Citing an array of dictionaries and cases, the court found definitions such as “[a] disease caused by the condition or hazards of a particular occupation” [14] and “an illness caused by factors arising from one’s occupation.” [15] In light of these broad definitions, the Supreme Court rejected the policyholder’s argument that the term “occupational disease” belonged to the workers compensation domain and should therefore only apply in a workers compensation context to claims brought by the policyholder’s own employees. [16] The Supreme Court acknowledged that “the relationship between occupational disease and workers’ compensation is now a matter of black letter law….” [17] However, it found that:

the definitions on which Vanderbilt relies — including the definition in Black’s Law Dictionary — [do not] suggest[] in any way that the phrase “occupational disease” is a construct devoid of meaning outside the law of workers’ compensation, notwithstanding its obvious significance within that area of the law. Instead, we read those definitions only to highlight the availability of workers’ compensation as a common, legal remedy for claims arising from the underlying condition. [18]

The Supreme Court also found it significant that the relevant exclusions themselves, like the general definitions of “occupational disease” that it had considered, did not contain an express limitation to the policyholder’s own employees. [19] The Supreme Court contrasted the language of the relevant exclusions with that of certain other exclusions contained in the relevant policies that did expressly limit the exclusion’s scope, noting that “when the drafters of the policy desired to limit the application of an exclusion to a certain group of individuals, they did so.” [20]

The Supreme Court then rejected the policyholder’s argument that the relevant exclusions were ambiguous in the absence of limiting language. [21] It also held that the policyholder’s preferred interpretation would require adding nonexistent limiting language in violation of bedrock principles of contract interpretation. [22]

The Supreme Court also disagreed with the policyholder’s argument that a reference to “occupational diseases sustained by any employee of the assured” in the body of one of the relevant policies limited the scope of the occupational disease exclusion in that policy, which was found in an endorsement. [23] The Supreme Court held that this reference did not constitute a generally applicable definition of “occupational disease” and so was irrelevant to interpreting the scope of the exclusion found in an endorsement. [24]

Finally, the Supreme Court addressed the policyholder’s argument that interpreting the occupational disease exclusion without an own-employees limitation would render the relevant policies’ liability coverage meaningless. [25] The Supreme Court found this argument “tempting” but ultimately held that the facts in the record undercut its applicability to the case at bar. [26] In Vanderbilt, the parties had stipulated below that the underlying claims were all brought entirely by claimants who were not the policyholder’s own employees, and those claims could be classified into three categories: claims arising from workplace exposure, claims arising from both workplace and nonworkplace exposure, and entirely nonworkplace exposure claims. [27] The Supreme Court held that its interpretation of the occupational disease exclusion did not render the relevant policies’ liability coverage meaningless in these circumstances, since that interpretation did not affect coverage for claims in the second and third category. [28] Moreover, the Supreme Court noted that even a significant exclusion limiting available coverage does not mean that the insured did not get the coverage for which it bargained or that the “insurance policies are rendered meaningless by virtue of the denial of coverage.” [29]

In light of all these reasons, the Supreme Court concluded that the occupational disease exclusion was clear and unambiguous, and it applies to occupational disease claims brought by both a policyholder’s own employees and other individuals who contract occupational disease in the course of work for other employers. [30]

Notably, in explaining the import of is decision, the Supreme Court did acknowledge that although a “disease might well have been contracted during [the underlying claimant’s] employment, that fact does not, without more, render it occupational in nature.” [31] Although the Supreme Court did not describe in detail what was needed to render a disease “occupational in nature,” it did suggest that the relevant employment had to be in “an industry that had peculiar incidence of diseases occasioned by exposure to [whatever the underlying claimant was allegedly exposed to].” [32]


Policyholders facing third-party long-tail liabilities whose general liability policies may be governed by Connecticut law should take heart that Connecticut has now joined those jurisdictions applying the continuous trigger theory and the unavailability-of-coverage rule. The Supreme Court’s Vanderbilt opinion also brings Connecticut into the majority of jurisdictions that properly interpret the qualified pollution exclusion as having no application outside the realm of traditional environmental pollution.

However, policyholders also should carefully review their policies for any “occupational disease” exclusionary language, particularly if those policies may be governed by Connecticut law. Policyholders that are uncertain as to whether Connecticut law may apply to the interpretation of their policies may wish to seek advice from coverage counsel regarding the applicable choice of law and the potential implications of Vanderbilt to their general liability insurance program. While a general “occupational disease” exclusion of the kind at issue in Vanderbilt may not be widely found in general liability policies, Vanderbilt may embolden insurers nationally whose policies contain similar provisions to attempt to raise new coverage defenses to escape their coverage obligations for toxic tort claims. Policyholders should carefully evaluate any attempts by their insurers to raise previously unasserted “occupational disease” exclusions.