California Insurance Companies Responsible To Pay More Than Before
Until recently, California insurance policies could not be stacked on top of each other to cover damages that occurred over a long period of time. Insured individuals had to pick a specific incident date and could only collect on the policy or policies in place at that time. However, a recent California Supreme Court case, in a unanimous decision, changed all of that, putting insurance companies on the hook for continuing damages to ensure that their policyholders are fully compensated for their losses. In its sweeping decision, the California Supreme Court specifically disapproves of a case wielded by many an insurance company and once considered the embodiment of anti-stacking law in California — FMC Corp. v. Plaisted & Companies (1998) 61 Cal.App.4th 1132.
State of California v. Continental Ins. Co., et al (2012) 55 Cal.4th 186
From the 1950s to 1970s, the state of California operated the Stringfellow Acid Pits, an industrial waste facility just east of Los Angeles. Over time, industrial waste leaked into the area’s groundwater and polluted an area miles wide. Courts found the state liable for the damage and responsible for the ongoing cleanup, which has been estimated to cost $700 million overall.
The state had several insurance policies from several insurers in place between 1964 and 1972, and sued those insurers to cover the cleanup costs. The trial court ruled that the state had to pinpoint a time when the damage occurred and could only recover the limit on the policies in place at that specific time. In other words, the trial court held that the state could not “stack” its insurance policies and recover from each term over the years that waste was leaking into the environment.
The Fourth District California Court of Appeals reversed the trial court’s “no stacking” decision, contradicting an earlier court ruling and essentially forcing the California Supreme Court to resolve the conflict. The high court agreed with the Fourth District, holding that where long-term damage has spanned several different insurance policies, the policies could be aggregated (“stacked”) to form one “uber policy” with a coverage limit equaling the sum of all of the individual policy limits.
Surely insurance companies will read the court’s ruling narrowly to apply only to policies without anti-stacking provisions; however, the far-reaching implications of this ruling are undeniable. Long-term damages arise in a variety of contexts, including construction defects, environmental damage, asbestos, and silicosis, as well as viral infections and other injuries resulting from defective biological products and medical implants. What some characterize as a narrow ruling may have opened the floodgates for policyholders to claim insurance proceeds for injuries sustained over long periods of time.
If you have suffered continuous damages and your insurer refuses to pay more than the limit of one policy, contact an experienced attorney to discuss your situation and your options to ensure you are paid what you are rightfully owed.