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Insurance Law

Perkins Coie On All-Sums-With-Stacking Allocation Boosts Insurance Recovery Under “One Giant ‘Uber Policy’”

Lara D. Cassidy, Koorosh Talieh, and Thomas McMahon   By Lara D. Cassidy, Koorosh Talieh, and Thomas McMahon, Attorneys, Perkins Coie

The California Supreme Court's recent "all-sums-with-stacking" allocation ruling in California v. Continental Insurance Co., No. S170560, 2012 Cal. LEXIS 7324 (Cal. Aug. 9, 2012) ("California"), casts a dagger in the back of insurers' traditional reliance on allocation as a first-line coverage defense.  Insurers routinely challenge the existence and extent of their coverage obligations to their policyholders by arguing, for example, that a particular policy is unlikely to be an allocation target, or that the policyholder is responsible for a substantial portion of the damages.

In California, the court granted the policyholder unfettered access to the sum total of insurance that it purchased over decades to respond to progressive environmental damage claims.  The court relied on established case law and the language of the policies at issue to conclude that the policyholder could call upon one policy after another, including excess policies, in any order it chooses to satisfy the its losses in full.  The court also rejected the insurers' attempts to assign to the policyholder damages for periods in which the policyholder failed or was unable to purchase insurance for any reason.

The significance of the California decision is measured by the millions upon millions of dollars that insurers have successfully foisted on their policyholders, either in settlement of long-term claims or after a judgment, in jurisdictions that apply pro rata allocation, or in which allocation remains an open issue.  Without question, the California case has reinvigorated policyholders to take up arms in the nationwide allocation battle, and offers policyholders a strong foundation on which to pursue similarly favorable allocation rulings around the country.

Lara Degenhart Cassidy is Of Counsel to Perkins Coie in Washington, DC.  Koorosh Talieh and Thomas McMahon are Partners in Perkins Coie's Washington, DC and Los Angeles offices, respectively.  Ms. Cassidy, Mr. Talieh and Mr. McMahon practice in the firm's Insurance Coverage Litigation Group, and have recovered insurance benefits for businesses facing environmental liabilities, product-liability claims, regulatory investigations, securities litigation, and commercial and employment disputes.   Their practice encompasses all phases of client counseling, complex litigation, appellate practice and alternative dispute resolution.

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Stacking of Insurance Policies

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