"Personal injury" coverage and climate change liability: why policyholders may target this coverage in responding to climate change suits based on nuisance claims

March 2010

This is the latest in a series of client advisories concerning climate change-related liability.


Recent alerts in the series on nuisance-based climate change suits

In December 2009 and January 2010 Environmental Alerts, Wilson Elser reported on several recent federal court decisions concerning whether to allow private claims predicated on the federal common law of nuisance against parties whose greenhouse gas emissions have allegedly contributed to global warming.  As reported in the previous alerts, the courts addressing this issue have reached conflicting conclusions as to whether such claims may stand.  Based on this, we noted in the alerts that a potential circuit split on this issue could ensue that might require the intervention of the U.S. Supreme Court to resolve.

Prospects of nuisance-based climate change litigation

Unless the U.S. Supreme Court completely forecloses the possibility of asserting climate change related claims sounding in common nuisance, such claims will be able to proceed in federal courts.  However, even if the U.S. Supreme Court were to hold that nuisance-based climate change suits could not proceed in federal court, it is likely that at least some of the state courts would allow such claims to stand.  At a minimum, therefore, we are reasonably certain that, at least at the state court level, nuisance-based climate change litigation will continue, and may expand as the issue gains momentum.

High costs of climate change litigation likely to lead to coverage disputes over duty to defend

In our May 2009 alert, we noted that, depending on its allegations, a complaint for climate change liability may be sufficient to trigger an insurer's duty to defend.  The costs of defending climate change suits will likely be significant as both sides of the dispute will most likely rely heavily on expert testimony for a host of issues, in particular the causation question.  Indeed, these costs could multiply exponentially in large, multi-party cases.  Faced with such expenses, policyholders will likely call upon their insurers to cover the cost of defending climate change lawsuits.  We therefore anticipate that, as climate change litigation expands, a rising number of coverage disputes will ensue – the initial focus of which will be on the insurers' duty to defend climate change lawsuits.

Availability of coverage for climate change suits under "Coverage A" of CGL policies

In our May 2009 Insurance Alert, we stated that insureds confronting the costs of climate change litigation may seek coverage for these matters under their historic general liability policies.  Liability policies traditionally provide coverage (which consists of a duty to defend and a duty to indemnify) for "all sums which the insured becomes legally obligated to pay because of bodily injury or property damage caused by an accident or occurrence." ("Coverage A")  As noted in our May 2009 Alert, many of these policies include "pollution exclusions."  A comprehensive discussion of the applicability of pollution exclusions in climate change liability suits is beyond the scope of this article and will be discussed more fully in future alerts.

Policyholders facing nuisance-based climate change suits may also seek "personal injury" coverage under "Coverage B" of their CGL policies

Policyholders faced with nuisance-based climate change suits may also target the "personal injury" coverage ("Coverage B"), which is a standard feature in liability policies.  The reason for this is that while the term is variously defined in different CGL policies, "personal injury" coverage is typically available for damages caused by certain "offenses" listed in the policy.  These include the violation of an individual’s right to privacy, wrongful entry or eviction, or "other invasion of the right of private occupancy."  Previously, in the context of environmental coverage litigation, policyholders argued that "personal injury" coverage should extend to environmental claims sounding in nuisance, reasoning that such claims involve an "invasion of the right of private occupancy."  The case law on this issue remains unsettled.  Some cases interpreted this coverage grant broadly, holding that pollution-related claims are covered under the personal injury definition.  Significantly, this line of cases also found that the pollution exclusion under Coverage A of the policy did not apply to the "personal injury" coverage.  Under this line of authority, policyholders seeking coverage for nuisance-based climate change liability suits could make an argument that the alleged nuisance arguably constitutes an "invasion of the right of private occupancy."  As such, the nuisance allegations may be broad enough to trigger at least a defense obligation under the "personal injury" coverage grant – the applicability of which would be unaffected by the pollution exclusion.  Of course, policyholders will also have to meet other criteria of coverage, such as demonstrating that an "occurrence" took place within the meaning of the policy and during the relevant policy period, that the occurrence resulted in damages.  These topics, however, also necessitate a separate discussion and will be the subject to future alerts.

Other cases, however, refused to extend personal injury coverage to environmental nuisance claims, reasoning that "other invasion of the right of private occupancy" required an interference with the possession of property.  These courts also rejected the fragmented approach to policy interpretation, and held that the pollution exclusion applies not only to Coverage A, but also to Coverage B of a liability policy.  Applying this line of decisions to nuisance-based climate change suits, insurers would likely argue that interference with the possession of property is required in order to find an "other invasion of the right of private occupancy," and that no such interference occurred in the context of climate change.  Furthermore, the insurers will likely argue that the policy of insurance must be interpreted as a single document, with all provisions including the pollution exclusion applying to the entirety of the policy.

What's ahead?

In sum, we anticipate that insurers and policyholders will assume the same battle lines in the context of nuisance-based climate change suits that they did in the context of pollution liability: policyholders will argue that nuisance allegations in climate change suits should be covered under the "personal injury" coverage, which includes coverage for invasion of the right to private occupancy and is unrestricted by the pollution exclusion.  Insurers will likely counter that nuisance-based climate change claims would not be covered under the "personal injury" coverage where there is no allegation of an invasion of any interest related to the possession of real property, as is the case with nuisance claims.  Even if they did fall within the scope of the "personal injury" coverage, they would argue that nuisance-based climate change claims are barred from coverage by the pollution exclusion.  In terms of litigation strategy, we fully expect policyholders will follow the same "playbook" they used in environmental coverage litigation: file a declaratory judgment against their insurers and then soon thereafter, while discovery is far from complete, move for summary judgment that the nuisance allegations in the climate change complaint create the potential for "personal injury" coverage, thereby triggering a duty to defend.  Insurers would argue that such motions are premature and cannot be granted due to issues of fact.

How courts will respond remains to be seen.  Those courts that did not previously address the personal injury coverage issue in the environmental context will be considering it as a question of first impression.  Even those courts that did already rule on the issue, however, may take a fresh look at the question given the new factual context – climate change – in which it is being presented.

Wilson Elser's Insurance Practice Group is continuing to monitor any insurance coverage decisions that relate to climate change litigation, and will continue to provide additional Insurance Alerts on any developments of interest.  For more information, please contact Carl J. Pernicone via email at or 212.490.3000 or Jana A. Slavina at or 914.323.7000.

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