Whenever successive insurers provide concurrent coverage for the same risk, there arises an issue of allocation of the risk between the successive insurers. In light of the impracticality or impossibility of trying to determine how much of the damage took place during a respective policy period in progressive or continuing injury situations, the courts have generally addressed allocation in continuous or progressive damage situations by generally adopting one of two different methodologies. The first methodology is to apply joint and several liability. This approach is sometimes referred to as the “all sums” approach because the courts adopting this approach often focus on the “all sums” language in the policy insuring agreement. However, the greater weight of authority of courts rejects the joint and several approach in favor of a proportional or pro rata approach. The State of Ohio has adopted a “all sums” joint and several allocation to coverage approach for continuous and progressive asbestos or environmental injury or damage cases. However, recently the Ohio Supreme Court in Lubrizol Advanced Materials, Inc. v. Insurance Co. of Pittsburgh, PA, 2020 Ohio 1579, 2020 WL 1943212 (Ohio, 4/23/20) did not apply the “all sums” allocation approach when the insurance policy was a “those sums” policy which covered discrete harm such as the failure of a plumbing system. In Lubrizol, the insured manufactured defective pipe resin which caused plumbing system failure over a seven-year period of time. The court in Lubrizol found that the insured could not seek full and complete indemnity against liability for resulting claims under a single insurance policy that covered “those sums” that the insured was legally obligated to pay.
Under National Union’s insurance policy, the insurer was obligated to “pay on behalf of the insured those sums in excess of the retained limit that the insured becomes legally obligated to pay . . . because of property damage” that occurred during the policy period. National Union argued that there was no coverage because its policies covered “those sums,” not “all sums” that the insured was legally obligated to pay as damages.
The Ohio Supreme Court (four of the seven justices) limited the “all sums” joint and several allocation approach to those cases involving indivisible, ongoing, continuous injury or damage, irrespective of whether the policy insured against “all sums” or “those sums.” The justices refused to engage in a hypertechnical grammar analysis to determine the difference between “those sums” and “all sums.”