Orphans in the Time on Risk Allocation

On Behalf of | Jul 15, 2016 | Insurance Law

Who pays for the orphan? The Federal District Court in New York recently held that when an insurance company becomes insolvent the insured becomes responsible for the orphan’s share created by the insolvency under a pro rata method of allocation involving successive insurers indemnity obligations for asbestos claims involving progressive injuries. See Liberty Mut. Ins. Co. v. The Fairbanks Company, 2016 WL 1169511 (S.D.N.Y. March 22, 2016).

There is very little case law addressing what happens when there is an uninsured segment of time when doing a Time-on-the-Risk Calculation. This case presents an answer to who must pay for the so-called orphan share.