{"id":894082,"date":"2018-04-26T10:21:46","date_gmt":"2018-04-26T16:21:46","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=894082"},"modified":"2018-04-26T10:21:46","modified_gmt":"2018-04-26T16:21:46","slug":"policyholders-bear-risk-insurance-unavailable-market","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/policyholders-bear-risk-insurance-unavailable-market\/","title":{"rendered":"Policyholders Bear the Risk When Insurance Was Unavailable on the Market"},"content":{"rendered":"

Alexis P. Joachim | Phelps Dunbar<\/a> | April 26, 2018<\/p>\n

On March 27, 2018, in a matter of first impression, the New York Court of Appeals ruled that under a \u201cpro rata time-on-the-risk\u201d allocation method, a policyholder bears the risk of uninsured years.\u00a0 In KeySpan Gas East Corp. v. Munich Reinsurance America, Inc., et al., <\/em>the court was faced with determining whether in a long-tail environmental claim and under a \u201cpro rata time on the risk allocation\u201d an insurer is liable to its insured for years outside its policy periods when no applicable coverage was available on the market.\u00a0 2018 WL 1472635.<\/p>\n

The insurer\u2019s expert opined that pollution coverage was not available to utility companies until 1925 and that a \u201csudden and accidental pollution exclusion\u201d was adopted by the insurance industry after the 1970s.\u00a0 Thus, KeySpan argued that allocation should not take into account those years prior to the availability of pollution coverage or after the unavailability of pollution coverage.<\/p>\n

The court therefore was faced with how to allocate time on the risk to \u201cgap years\u201d or years in which no coverage existed.\u00a0 The court recognized that courts in other jurisdictions generally require the policyholder to participate in the allocation for periods of non-coverage, but are \u201cdivided with regard to whether a policyholder should be held responsible for those periods of time when the relevant coverage was not offered for sale on the market.\u201d<\/p>\n

Some jurisdictions do not put the policyholder \u201con the risk\u201d if insurance was unavailable \u2013 i.e. <\/em>\u201cthe unavailability rule.\u201d\u00a0 Other courts have rejected this rule and held that the policyholder is on the risk for periods of non-coverage, regardless of whether the absence of coverage was voluntary or due to the inability to obtain coverage.<\/p>\n

The court held that the unavailability rule was inconsistent with the policy language that requires the application of the pro rata approach \u2013 i.e. <\/em>\u201cduring the policy period\u201d limitation.\u00a0 The court explained that allowing an insurer to be responsible for risks outside the policy period provides the policyholder with coverage for years where no premiums were paid and is beyond the reasonable expectation of the average insured, who would expect to receive coverage for risks during the policy period and nothing more.<\/p>\n","protected":false},"excerpt":{"rendered":"

Alexis P. Joachim | Phelps Dunbar | April 26, 2018 On March 27, 2018, in a matter of first impression, the New York Court of Appeals ruled that under a \u201cpro rata time-on-the-risk\u201d allocation method, a policyholder bears the risk of uninsured years.\u00a0 In KeySpan Gas East Corp. v. Munich Reinsurance America, Inc., et al.,… Continue reading Policyholders Bear the Risk When Insurance Was Unavailable on the Market<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9914],"tags":[9895,23,303,10443,10444],"class_list":["post-894082","post","type-post","status-publish","format-standard","hentry","category-insurance-coverage","tag-advise-consult","tag-insurance-coverage","tag-new-york","tag-pollution-coverage","tag-unavailability-rule","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nPolicyholders Bear the Risk When Insurance Was Unavailable on the Market - 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