On Feb. 22, 2011, the New York Court of Appeals issued a landmark decision favoring insurance policyholders that effectuates the purpose and intent of what is known as “follow form” provisions in excess insurance policies. At issue before the state’s highest court was whether multi-year excess policies that stated a “$30,000,000 each occurrence and in the aggregate” limit provided the policyholder one $30 million aggregate limit, as the insurers contended, or a $30-million limit in each annual policy period, as the insured contended.
The IAS Court held that the policy provides the latter, i.e. a $90 million total limit of liability for the three-year policy rather than a $30 million limit. The Appellate Division, First Department, reversed holding the former, and the Court of Appeals reversed in favor of the policyholder agreeing with the IAS Court. See Union Carbide Corp. v. Affiliated FM Insurance Co., case number 16, in the New York Court of Appeals (Feb. 22, 2011).
The ‘Annualization’ Issue
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