The Importance of the Noncumulation Clause

There have, in recent years, been several cases dealing with exposure to physical conditions, such as lead paint, asbestos or pollutants, over extended periods of time, and the issue of whether one, or more than one, coverage limit was or could be applicable under the particular circumstances. As will be seen, the results in these cases are highly dependent upon the specific language of the policies at issue. More specifically, as will be demonstrated, in those decisions that have held that the coverage was limited—either to the per occurrence limit, rather than the aggregate limit, or to a single policy, rather than multiple successive policies—the policies contained specific noncumulation or anti-stacking clauses, or provisions clearly and specifically defining all bodily injury and property damage resulting from continuous or repeated exposure to the same general conditions to be the result of one occurrence. Where such provisions are absent from the policy, the opposite result may obtain, as was the case in a recent Court of Appeals decision discussed later.

Early Case Law

In In re Liquidation of Midland Ins., 269 AD2d 50 (1st Dept. 2000), abrogated on other grounds, 16 NY3d 536 (2011), the Appellate Division, First Department, was presented with several coverage questions, including whether the definition of "occurrence" within successive excess policies required the court to treat the excess coverage as one policy or to permit the coverage to be aggregated. The coverage form at issue defined an "occurrence" as "an event, including continuous or repeated exposure to conditions, which result in personal injury…," and included the following provision: "All such exposure to substantially the same general conditions shall be deemed one occurrence." The court reasoned that this policy language was intended to restrict the liability of an insurer to one coverage limit in a case where there had been continuous exposure to a condition or set of conditions. And, as stated by the court, "Our reading of the policy at issue indicates that the purpose of defining all exposure as one occurrence is to make clear that only one deductible will apply, and that the limit of liability where an insurer has issued renewal policies shall be the policy limits for one policy, rather than the aggregate for all policies issued. Otherwise, an insurer that issues a $1 million liability policy renewed 20 times could find itself liable for $20 million in damage claims for the same injury." 269 AD2d at 59.