Dec. 2011/Jan. 2012 / Features
Insurance Coverage for Climate Change Lawsuits
Although no court has imposed liability on a defendant for damages allegedly caused by climate change, defendants have incurred millions of dollars defending these claims. Thus, the duty to defend, even without liability, may prove to be invaluable.
Since the duty to defend is contractual, whether a policyholder is entitled to coverage will turn on the law of the jurisdiction and the insurance contract at issue. The analysis to which courts universally adhere considers whether there exists a possibility that any single allegation will give rise to liability within the terms of coverage.
Standard form general liability policies require an insurer to defend the policyholder against suits seeking damages for bodily injury, personal injury or property damage caused by an “occurrence,” usually defined as an “accident, including a continuous or repeated exposure to substantially the same general harmful condition.” In determining whether an accident occurred, courts consider whether the alleged damage is unexpected and unintended.
General liability policies should also provide indemnity coverage for damages caused by the policyholders. If a claim is potentially covered, the burden shifts to the insurer to argue whether any policy exclusions apply. Insurers in global warming cases may argue that a policy’s pollution exclusion bars coverage. Such an argument is unlikely to succeed for several reasons, among them that carbon dioxide serves many natural and necessary purposes and thus is not a pollutant in the sense that term is usually understood.
