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Owens-Illinois, Inc. v. United Ins. Co.

Supreme Court of New Jersey

September 26, 1994, Argued ; December 22, 1994, Decided

A-10/11/12/13/14-94

Opinion

 [*441]  [**976]   The opinion of the Court was delivered by

O'HERN, J.

This appeal involves two aspects of a dispute between a manufacturer of an asbestos product and its insurers concerning the coverage afforded to the manufacturer under its liability insurance policies. First is the "trigger of coverage" issue, a shorthand expression for identifying the events that must occur during a policy period to require coverage for losses sustained by the policyholder. Second is the "allocation issue," which involves the scope of coverage afforded under a triggered policy. One question,  [*442]  for example, in the case of gradually-inflicted injury or property damage triggering a number of successive policies is whether the policyholder may recover the sum of all the policies or some allocated portion of each policy. The case is complicated by the fact that the plaintiff-manufacturer used a "captive insurance company" to manage its risks and to acquire the subject policies.  [***13]  That captive company, a wholly-owned subsidiary of the manufacturer, was in form a shell that reinsured the risks with the various defendant insurance companies.

The Appellate Division has ordered a hearing, 264 N.J. Super. 460, 522, 625 A.2d 1 (1993), on issues of fraud related to the issuance of the policies in that officers of the manufacturing company or the captive company, interlocked as they were, may have failed to disclose fully the underwriting risks for which the manufacturer sought coverage. The court below also believed that "further airing" was necessary to resolve whether the manufacturer expected or intended that its product would cause injury. Id. at 515, 625 A.2d 1. Those and other issues decided by the Appellate Division are not part of this appeal.

Background

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138 N.J. 437 *; 650 A.2d 974 **; 1994 N.J. LEXIS 1178 ***

OWENS-ILLINOIS, INC., A CORPORATION DULY ORGANIZED UNDER THE LAWS OF THE STATE OF OHIO, PLAINTIFF-RESPONDENT, v. UNITED INSURANCE CO., A CORPORATION DULY ORGANIZED UNDER THE LAWS OF THE BRITISH WEST INDIES; OWENS INSURANCE LIMITED, A CORPORATION DULY ORGANIZED UNDER THE LAWS OF BERMUDA; AND GENERAL REINSURANCE CORPORATION, A CORPORATION DULY ORGANIZED UNDER THE LAWS OF DELAWARE, DEFENDANTS-APPELLANTS, AND AMERICAN RISK MANAGEMENT, INC., A CORPORATION DULY ORGANIZED UNDER THE LAWS OF BERMUDA; INTERNATIONAL RISK MANAGEMENT LTD., A CORPORATION DULY ORGANIZED UNDER THE LAWS OF BERMUDA; AND ARMRISK, INC., A CORPORATION DULY ORGANIZED UNDER THE LAWS OF BERMUDA, DEFENDANTS, AND ALLSTATE INSURANCE COMPANY AND AMERICAN RE-INSURANCE COMPANY, INTERVENORS-APPELLANTS, AND CIGNA REINSURANCE COMPANY (FORMERLY INA REINSURANCE COMPANY), INTERVENOR.

Prior History:  [***1]  On certification to the Superior Court, Appellate Division, whose opinion is reported at 264 N.J. Super. 460, 625 A.2d 1 (1993).

CORE TERMS

coverage, policies, insured, exposure, triggered, disease, occurrence, manifestation, asbestos, property damage, damages, policy period, insurance company, cases, occurs, indemnity, costs, asbestos-related, manufacturer, courts, environmental, policyholder, risks, progressive, personal injury, bodily injury, carriers, limits, Insulations, injuries

Insurance Law, Coverage, Triggers, General Overview, Environmental Law, Hazardous Wastes & Toxic Substances, Asbestos, Commercial General Liability Insurance, Asbestos Claims, Exposure Triggers, Injury in Fact, Civil Procedure, Jury Trials, Jury Instructions, Real Property Law, Environmental Regulations, Indoor Air & Water Quality, Continuous Triggers, Parties, Intervention