‘Limits of Liability’ Clauses Place Absolute Limit on Clearwater’s Exposure, N.Y. Federal Judge Rules

ALBANY, N.Y. — The “limits of liability clause” contained in two facultative reinsurance certificates expressly limit Clearwater Insurance Co.’s liability to $5 million and $2.5 million, respectively, for an underlying asbestos settlement, regardless of whether its cedent’s defense and/or expense costs exceed those limits, a New York federal judge has ruled.

In a Nov. 20 order, Chief Judge Gary L. Sharpe of the U.S. District Court for the Northern District of New York found the language of the clause clearly establishes absolute limits on the reinsurer’s liability and caps its overall liability for both defense and expenses.

Utica Mutual Insurance …