Insurer Liable for Asbestos Claims Decades Later, Decides Court

Insurers and insureds square off in court on policy disputes involving legacy liability for asbestos claims.
By: | January 23, 2019

During the 1970s mining of vermiculite — a mineral most commonly used in insulation — several workers were injured due to asbestos exposure. It wasn’t until nearly three decades later, however, that the workers started presenting claims against their employer.

Those injured by the asbestos sued the state of Montana as early as 2002, alleging that the state knowingly allowed employees to work in vermiculite mines. In the lawsuit, the workers claimed the state knew as early as 1942 that the exposure was “in excess of safe limits.”

The suit also mentioned that an inspection in the 1950s reported a “considerable toxicity” in the air. The suit claimed the state failed in its duty to protect its workers.

While examining the suit, the state found documentation showing it held a general liability insurance policy with Berkshire Hathaway’s National Indemnity Co. from 1973 to 1975. The policy was written to protect the state from personal-injury and other claims. The state notified National Indemnity immediately of the potential liability and said the company should be liable for the suits’ costs.

In 2009, Montana reached a $43 million settlement with the miners. National Indemnity, at first, agreed to cover the settlements, even paying $16 million, but then later retracted the offer. It believed that the 1975 policy did not cover asbestos-related claims and believed it was not liable for the settlement.

In court, however, the state district judge ruled that National Indemnity breached its duty by failing to protect the state of Montana against damage claims made by asbestos victims. Therefore, the insurer could not deny settlement coverage.

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The judge also looked forward to potential claims. More than 850 additional claimants not included in the 2009 settlement had sued the state as of 2015. Like the 2009 ruling, any additional settlements would equally fall under the National Indemnity policy, the judge ruled.

Scorecard: National Indemnity Co. is responsible for the $43 million settlement stemming from asbestos-related claims dating as far back as 1973. Additionally, the insurer is responsible for any new settlements stemming from the incidence.

Takeaway: Past policies still hold firm and insurers may still be held liable, even 45 years later, if the cause of loss occurred during the policy period. &

Autumn Heisler is the digital producer and a staff writer at Risk & Insurance®. She can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]