An appeals court in Virginia has ruled that insurance companies do not have to cover situations that are due to claims stemming from global warming. This is the first case of its kind, and can be viewed as creating a precedent for future insurance claims that have to do with damages or lawsuits involving damages caused by global warming.
Should an insurance policy pay out on damages or liability issues due to global warming? This is a question that really hasn’t been considered in the past. It is being considered now because of a particular lawsuit. It is entirely possible that there will be more lawsuits in the future that have something to do with global warming.
A company named AES Corp. has insurance through an insurer called Steadfast Insurance. AES Corp. was named as one of the many defendants in a lawsuit called Kivalina v. Exxon Mobil Corp., et. al.. The lawsuit is currently being heard in the Ninth U.S. Circuit Court of Appeals.
Kivalina is a village located on the coast of Alaska. In the lawsuit, Kivalina is claiming that emissions that were released from activities done by the companies that the village is suing are the cause of rising sea levels that are putting the village in danger. In short, the village feels that since the companies did things that caused global warming. that the companies, therefore, should pay for the damages that the village is suffering as a result.
It is fairly common for businesses to purchase some form of liability insurance. In general, it provides some financial assistance to a business in case the company gets sued. It might pay for the lawyers fees, court costs, and settlement fees. In some cases, it could possibly provide a business with some financial assistance due to lost earnings while the store wasn’t open for business, (due to a lawsuit, a natural disaster, or other damages).
AES Corp. asked its insurance company, Steadfast, to defend it in the lawsuit. Steadfast said no, so AES Corp. took its insurer to court over this decision. A court in Arlington County, Virginia, decided that Steadfast did not actually have “a duty to defend” AES Corp. This is because there wasn’t an incident, or accident, or “occurrence” that would trigger the insurer to defend the company.
Specifically, the court decided the lawsuit with Kivalina is about whether or not AES Corp. did something that that constitutes negligence. If so, the natural consequences of that intentional act would not be an “accident”. Steadfast is only obligated to defend AES Corp. in situations involving bodily injury, or property damage cause by an incident or occurrence.
Image by USCG Press on Flickr