Last month, the Maryland Court of Special Appeals issued its opinion in Maryland Casualty Co. v. Hanson. The issue in the case involved whether multiple exposures to lead-based paint over multiple years constituted multiple occurrences such that the insurance policies would stack or whether the policy’s “limitation of liability” provision defining continuous exposure as one occurrence, thus limiting the amount of insurance coverage. This is a classic long-term toxic exposure case involving many insurance policies. The question is which insurance carrier(s) is/are on the risk and whether the policies stack.
The issue, in this case, is whether the continuous trigger theory applies. The continuous trigger is a relatively recent idea in the law that deals with the problem of repeated injury. Under this theory, a loss occurs for insurance coverage during any time of exposure. It is sometimes called the triple trigger because coverage is invoked in one of three ways: initial exposure, continuing exposure, or by a manifestation of loss.
In the underlying case in Maryland Casualty v. Hanson, the plaintiffs were children exposed to lead paint at a property owned by the defendant on North Central Avenue in Baltimore, Maryland. The exposure to lead-based paint was over six years, spanning several insurance policies.
Judge Albert J. Matricianni, Jr. ruled that if there is proof of repeated exposure to a toxic substance that continues over time, the continuous injury or injury–in–fact trigger applies and thus triggers insurance coverage during all applicable policy periods. Thus, Maryland Casualty was found to be one of the insurance companies on the risk and their policy would stack with the other insurance companies on the risk.
Maryland Casualty’s lawyer argued on appeal to the Maryland Court of Special Appeals that Maryland Casualty’s policy language, which is the typical language in these policies, limited coverage to a single occurrence. Specifically, Maryland Casualty’s attorney contended that the limit-of-liability provision in Maryland Casualty’s insurance policy limited its coverage to a single occurrence: “Limits of Liability: Regardless of the number of (1) insureds under this policy, (2) persons or organizations who sustain bodily injury or property damage, or (3) claims made or suits brought on account of bodily injury or property damage, the company’s liability is limited as follows . . . For the purpose of determining the limit of the company’s liability, all bodily injury and property damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one occurrence.”
The Maryland Court of Special Appeals noted that the Maryland Casualty policy language is standard general commercial liability policy language. Under this and similar language, the court pointed to an evolution in the law concerning what coverage applies in continuous or multiple exposure cases. The court found that the law in Maryland is now that proof of repeated exposure to lead, which results in lead-based poisoning injuries that continue for several years, with continuous exposure, the continuous injury or injury–in–fact trigger applies. Thus, insurance coverage is triggered during all applicable policy periods.