Asbestos Manufacturing and Expected Injury

 

January 7, 2013

 

The insured, an asbestos manufacturer, sued its insurer seeking coverage for bodily injury claims. This case is Union Carbide Corporation v. Affiliated FM Insurance Company, 2012 WL 6049653.

 

Union Carbide sued Affiliated FM Insurance Coverage to get coverage for bodily injury claims made against Union Carbide arising from exposure to asbestos products. The Supreme Court, New York County ruled in favor of the insured and the insurer appealed.

 

The Supreme Court, Appellate Division, First Department found that the insured met its burden of establishing that the damages at issue were the result of an occurrence and that the policy provided coverage. The record supported the insured's contention that, although it was aware of some risk involved in the utilization of asbestos, at all times relevant to this appeal, it believed that its asbestos products could be used safely under the right conditions. The court said that Union Carbide also offered as further proof of any lack of intent, evidence that it published regulatory information in trade periodicals and provided information regarding the dangers of asbestos, as well as guidance concerning its proper usage to its clients and potential customers. In addition, the insured presented evidence that, during the relevant time period, the federal government shared Union Carbide's belief that asbestos could be used safely and, to that end, promulgated regulations designed to control, monitor, and record asbestos usage, but, more importantly, did not ban it.

 

Since the insured established coverage, the court said, the burden shifted to the insurer to show that, pursuant to the policy's exclusion, the insured intended the damages. The court found that the insurer failed in this regard. The insurer asserted that Union Carbide intended the damages because it knew that asbestos would cause injuries and that claims would be filed against it. The record, shows, however, that Union Carbide merely was aware that asbestos could cause injuries and that claims could be filed. The calculated risk made by the insured in manufacturing and selling its products despite its awareness of possible injuries and claims does not amount to an expectation of damages.

 

The ruling of the trial court was affirmed.

 

Editor's Note: This decision of the New York Appellate Court shows the difficulties in using the expected or intended injury exclusion to deny coverage under a general liability policy. Asbestos has been shown to cause serious health problems, but the insurer could not prove that the manufacturer insured in this instance expected or intended the bodily injury. The insured was aware of the potential problems and risks, but this did not equate with actual expectations and intentions.