Thursday, June 16, 2011

First the birth certificate thing and now this . . .

Tred Eyerly discusses a new statute in Hawaii on his blog Insurance Law Hawaii.

According to Eyerley, the statute provides that an "occurrence" in a liability policy "shall be construed in accordance with the law as it existed at the time that the insurance policy was issued."

The statute was apparently passed in response to a court decision holding that construction defects are not occurrences.

I don't have any additional information on the new statute, but if it's as broad as Eyerly describes there could be some insurance coverage attorneys in Hawaii who will make a great (if unexciting) living off of it. Let's say there's an environmental coverage case in which a pollutant seeped into the ground from 1935 to 1975. When the insurance coverage aspect comes up, as it inevitably will, the parties will be arguing the definition of occurrence in each policy year. Maybe -- and I have no idea -- there was a decision by the highest state court in Hawaii in 1934 giving a clear definition of occurrence. (It's not very likely, but it could be.) If one of the policies was issued outside of Hawaii, assuming that Hawaii follows the usual choice of law rules, the history of occurrence litigation in that state will come into play.

And let's not forget that the definitions of occurrence given in standard policy forms have evolved over the years.

And finally, as a philosophical matter, what does it mean to "construe" a concept "in accordance with the law as it existed at the time that the insurance policy was issued." For example, if a court of a particular state makes a ruling on triggers of coverage for the first time in 1972, and holds that the manifestation trigger applies, does that mean that the manifestation trigger does not apply to policies issued before 1972? Or would the manifestation trigger apply all the way back because if the word occurrence was construed that way in 1972 then logically it always had to be construed that way?


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asa said...

So this means less incidents being covered by insurance and more litigation. Just what this society needs

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Dan Williams said...

So...less covered events and more
litigation. Hmmm, just what we need

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Nina Kallen said...

I believe the intent of the legislation is to provide more, not less, coverage. Tred Eyerly relayed to me that as written the legislation applies only to construction defect cases. It's purpose is to make sure that construction defects come within the definition of occurrence. A Hawaii court had ruled that it doesn't. It's an issue which is hotly contested nationally.