Allocation and Occurrence Questions Ceritified to Wisconsin Supreme Court
The 7th Circuit has asked the Wisconsin Supreme Court to address the numbering of occurrences and allocation questions raised by long-tail losses. In Plastics Engineering Co. v. Liberty Mut. Ins. Co. (7th Cir. (Wis.) Jan. 22, 2008), the insured sought defense and indemnity for multiple asbestos claims spanning successive policy periods. The district court had concluded that each person's injury caused by exposure to asbestos-containing products constitutes a separate “occurrence”; that non-cumulation provisions in the policies limited each claimant's recovery to the maximum amount allowed in a single triggered policy for an occurrence; and, that defense and indemnity would be allocated on an “all sums” rather than pro rata basis. On appeal, the 7th Circuit found that Wisconsin law does not provide sufficient guidance as to how the Wisconsin Supreme Court would resolve these issues, and certified these questions to the Wisconsin Supreme Court:
1. Under Wisconsin law, what constitutes an “occurrence” in an insurance contract when exposure injuries are sustained by numerous individuals at varying geographical locations over many years?
2. Does Wisconsin Statute § 631.43(1) apply to successive insurance policies when an occurrence is ongoing and spans multiple insurance policies, thereby prohibiting efforts by consecutive insurers to reduce coverage to the maximum of a single policy period?
3. In Wisconsin, are insurers obligated to pay “all sums” related to the defense and/or indemnification of an injury that triggers one insurance policy; or alternatively, are insurers liable for a pro rata share of defense costs and/or damages depending on how much of the injury occurred during the triggered insurance policy period?
