Allocating Insurance For Environmental Contamination Claims

Environmental claims brought by governments or private parties against owners or operators of property inevitably raise the question of whether insurance coverage is available to pay for all or some of the costs associated with such liabilities. In many cases the answer is yes, but properly assessing coverage prospects in cases of environmental damages claims can be a daunting prospect. This type of insurance claim often involves interpreting numerous historical policies, different layers of coverage, time periods that may span decades, uncertain facts, and competing court decisions interpreting similar policy language. Allocating responsibility among insurers is a task so complex, it has been labeled, in one case, as "both scientifically and administratively impossible." Boston Gas Co. v. Century Indem. Co., 454 Mass. 337, 351 (2009). Yet, it is an issue that policyholders are wise to pursue, with competent counsel, in light of the large potential liabilities such cases present, and the prospect of significant recovery from insurers.

A recent First Circuit decision in Boston Gas Co. v. Century Indem. Co., 708 F.3d 254 (2013), applying Massachusetts law, presents an opportunity to compare the approach of the New Hampshire Supreme Court and the Massachusetts Supreme Judicial Court in addressing the complexities presented by so-called long-tail environmental claims. Making this comparison also will demonstrate some of the difficulties insureds and their insurers confront in this area of the law.

When faced with allocating coverage for...