DECEMBER 2012 BAD FAITH CASES: COURT APPLIES NEW YORK LAW AND GRANTS SUMMARY JUDGMENT FOR CARRIER ON INSURED’S INDEMNITY CLAIM STEMMING FROM UNDERLYING ASBESTOS SUIT (Philadelphia Commerce Court)

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In Anheuser-Busch, Inc. v. Ins. Co. of N. Am., the court undertook a conflict of law analysis, reasoning that New York law should apply to a dispute between a carrier and it’s insured regarding the carrier’s duty to indemnify the insured in an underlying asbestos exposure lawsuit.

The carrier’s duty to indemnify was triggered by excess liability coverage within the insured’s policy. Based on New York’s risk allocation method, however, an analysis that Pennsylvania rejects, a court should pro-rate the total amount of an insured’s losses based upon the length of time for which insurance coverage existed. When damages to the insured are allocated over the thirty-year span during which it was insured, the resulting figure did not trigger excess coverage in the policy requiring the carrier to indemnify its insured.

As such, the insured’s claims for bad faith and breach of contract, arising out of the carrier’s denial of coverage, were denied as moot.

Date of Decision: November 1, 2012

Anheuser-Busch, Inc. v. Ins. Co. of N. Am., No. 315, 2012 Phila. Ct. Com. Pl. LEXIS 335, Philadelphia Court of Common Pleas (Pa. C.P. 2012) (McInerney, J.)

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