Employers' Liability Insurance: 'Exposure' Basis For Mesothelioma Claims

On Friday, the High Court ruled in the Employers' Liability

Policy "Triggers" Litigation that employers'

liability insurers remained liable to pay compensation for

mesothelioma caused by exposure to asbestos in the work place if

they insured the employer at the time the exposure occurred.

Traditionally, EL Insurers' practice in relation to

mesothelioma claims has been for the insurer on cover at the time

of the asbestos exposure to pay.

(Occurrence of the disease, arguably the growth of a tumour of

diagnosable size, can develop some 40 years after exposure.)

By contrast, in Bolton v MMI (2006) the Court of Appeal held, in

relation to apublic liability policy

which responded on an "occurrence" basis that it was the

policy in place when the disease occurred which responded to the

claim - not the policy in place when the employee was exposed to

asbestos. Following Bolton some employer's

liability insurers declined to pay mesothelioma

claims under EL policies in force at the

date the mesothelioma sufferer inhaled asbestos. This was on the

basis that the words "sustained" or

"contracted" in an EL policy had the same effect as the

phrase "injury occurring" in a PL policy and that, by

analogy with Bolton, injury is only sustained for the purposes of

an EL policy at the time the tumour develops. This line or argument

threatened to create a "black hole" for some sufferers

where there was no insurance in place at the date of the tumour,

for example, where the employer had become insolvent or no longer

required EL cover.

In Friday's decision the court distinguished Bolton on the

basis that the latter involved a PL policy, which has a different

origin from EL insurance and is not causation based. The court

found that the EL policies in issue in the cases before it on

Friday triggered in the same way as policies using the phrase

"injury caused". The decision meets what some would see

as the fundamental commercial purpose of EL insurance, namely to

cover the employer's liability for injuries and illness caused

to its employees while they are in its employ.

The decision will be seen as restoring a degree of consistency

to EL Insurers' treatment of mesothelioma claims. It should be

noted, however, that:

permission to appeal has been granted

whilst a court will be driven to some extent by considerations

of public policy, cases such as this inevitably turn on particular

policy wording. It remains to be seen whether EL Insurers will seek

to contain their...