The government’s increased focus on plastics-related litigation signals a potential rise in liabilities for companies in this sector. Organizations subject to investigations and lawsuits related to plastics should explore their insurance options to mitigate defense costs and potential losses. According to Bloomberg Law, modern pollution liability policies can offer protection covering site cleanup costs, damage to natural resources, and third-party claims for bodily injury or property damage arising from plastic pollution.
Broader liability concerns, such as those associated with long-term exposure to plastics leading to bodily injury or property damage, may be covered under commercial general liability insurance, including product liability insurance. These policies are usually occurrence-based, meaning they respond based on the policy period when the alleged event occurred, not when the claim was made. Consequently, prolonged activities triggering long-term liabilities could implicate multiple insurance policies spanning several years or decades, each potentially contributing to the defense and settlement costs.
Policyholders must consider specific issues related to coverage for long-term liabilities. The definition of an “occurrence” and the determination of when coverage is triggered are crucial. For prolonged injuries or damages, courts may employ different approaches to ascertain the triggering event, which could range from initial exposure to plastics to the discovery of injury or damage.
Allocation is another significant aspect, where courts may adopt joint and several liability or a pro rata approach. The former allows policyholders to recover all losses under any triggered policy period, while the latter allocates losses proportionally over the applicable time periods.
Pollution exclusions in insurance policies further complicate coverage. While older policies might have limited exclusions, modern ones generally encompass broader pollution exclusions. There are varying interpretations of what constitutes a “sudden and accidental” pollution event, and cases like those adjudicated recently in Hawaii illustrate the ongoing judicial assessments of these exclusions, particularly concerning newer environmental challenges such as climate change and greenhouse gases.
Additionally, directors and officers liability insurance might provide coverage for claims alleging misrepresentations about product recyclability or other related issues. A New Jersey court upheld that securities claims, even those rooted in pollution issues, could fall under directors and officers policies, an analysis supported by a recent New Jersey ruling. Other types of insurance, such as commercial property or errors and omissions insurance, could also be relevant depending on the specific liabilities or losses a policyholder faces.
The intricate landscape of insurance coverage underscores the importance for policyholders to carefully evaluate their policies and understand the potential protections available for different types of plastics-related claims. For further analysis, see the detailed study by Brian Scarbrough and Arie Feltman-Frank from Jenner & Block.