McCarter & English LLP on Viking Pump, Inc. v. Century Indemnity Company

McCarter & English LLP on Viking Pump, Inc. v. Century Indemnity Company

 
A recent Delaware Chancery Court ruling in Viking Pump, Inc. v. Century Indemnity Company addressed two issues of significant under New York law: allocation of insurance losses and assignment of insurance rights. As to the former, the Court upheld a policyholder’s right to transfer insurance for losses arising prior to the transfer of coverage, holding policies’ anti-assignment provisions unenforceable post-loss. The Court also ordered an “all sums” allocation methodology be employed in connection with the plaintiffs/policyholders’ long-tail asbestos losses. The Court distinguished prior New York “pro rata” allocation rulings favorable to insurers. It found that no bright-line public policy based rule required using a pro rata methodology. The Court, instead, concluded that the appropriate allocation method should be determined based on principles of contract interpretation. Where, as here, the involved policies’ contained “non-cumulation,” and “prior insurance” provisions, the Court determined that they could not “sensibly be applied within a pro-rata allocation scheme,” and ordered an all sums allocation.
 
 
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