Penn. Court Rules Long-term Pollution Case Against Insurers Should Proceed

October 23, 2001

The Pennsylvania Supreme Court has reversed a lower court decision which had barred an action against Liberty Mutual and other insurers brought by Sunbeam Corp. and a number of other plaintiffs, seeking to recover claims on general liability policies for long term environmental pollution.

According to plaintiff’s attorneys, the Philadelphia firm of Anderson, Kill & Ollick, the court relied heavily on a 1970 memorandum filed by a number of insurers with the PA Insurance Dept. (PID) in which they notified it that they intended to exclude coverage on “sudden and accidental” pollution, but assured the PID that this would not result in any decrease in coverage for policyholders.

The court found, however, that, contrary to this undertaking, insurers had in fact denied coverage for long term and unintentional pollution claims, and ruled that this action was at odds with their stated representations made in the memorandum to the PID. It therefore allowed the policyholders to pursue their claims under their policies against Liberty and other insurers for the damages caused by long-term environmental pollution.

It also limited the “sudden and accidental” language to apply only in special circumstances, ruling that the plaintiffs had correctly asserted that coverage should be extended for both gradual and abrupt pollution or contamination so long as it was unexpected or unintended.

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