Over time, New York’s courts have erected multiple barriers to policyholders seeking to recover insurance for long-tail, progressive injury claims—such as environmental or asbestos liabilities—that can implicate multiple policies over multiple policy terms. Now, in a New York minute, just weeks after hearing oral argument, the Empire State’s highest court leveled the playing field by endorsing the “all sums” and “vertical exhaustion” approach to allocation advocated by a policyholder, at least as to policies containing “non-cumulation” and “prior insurance” provisions.
In In re Viking Pump, Inc., New York’s Court of Appeals did not overrule its 2002 decision in Consolidated Edison Co. of New York v. Allstate Ins. Co., which had applied pro rata allocation where the non-cumulation clause argument was not raised, but the court made clear that pro rata allocation is not the default rule in New York. Rather, the specific wording of the triggered policies will control, and can require allocation on an all-sums basis. This is a huge win for policyholders with New York liabilities and a further endorsement, by a prestigious court, of the “all sums” approach to allocation.