STORY FROM: Reinsurance & Arbitration

Gas Co. Liable for Cleanup Costs When Coverage Was Unavailable, N.Y. High Court Says

NEW YORK — New York’s highest court has held that a gas company must pay for cleanup costs arising from environmental contamination that took place during years when there was no pollution property damage liability coverage on the market.

In a March 29 decision, the New York Court of Appeals held that Century Insurance Co. is not liable for those costs because it would contravene the “pro rata time-on-the-risk” allocation mandated by the policies at issue. Holding an insurer liable for damages resulting from occurrences outside the policy period would contravene the premise underlying pro rata allocation, the court explained.

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Covington & Burling
O'Melveny

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