Coverage Analysis
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CONNECTICUT

  ACCIDENTS OR OCCURRENCES

  Deliberate acts that are inherently injurious or which natural and inevitably result in injury are not "accidents" or "occurrences" under Connecticut law.  Providence Washington Ins. Group. v. Albarello, 784 F.Supp. 950 (D. Conn. 1992)(wrongful discharge case).

  However, the Court of Appeals has suggested that this presumption of injury may be rebuttable if the insured establishes that he or she was incapable of controlling their conduct or forming an intent to injure.  USAA v. Marburg,  698 A.2d 914 (Conn. App. 1997)(dicta).

  A party will be deemed to have intended to cause harm where the injury was "substantially certain" to flow from the insured's conduct.  Home Ins. Co. v. Aetna Life & Cas. Co., 35 Conn. App. 94, 544 A.2d 933 (1994).  See also Middlesex Mut. Assur. Co. v. Rand, 1996 WL 218698 (Conn. Super. April 4, 1996)(sexual assault held inherently injurious).

  The Connecticut Court of Appeals also ruled in Home that an insane person will not be deemed to have "expected or intended" injury is his or her mental condition interferes with the ability to understand the nature and wrongfulness of their actions.
 

  ALLOCATION AND SCOPE ISSUES

  Where more than one insurer is deemed to have a duty to defend, the Appeals Court has ruled that they should contribute shares in proportion to their respective policy limits. Sacharko v. Center Equities Limited Partnership, 2 Conn. App. 439, 479 A.2d 1219, 1224 (1984).

  A state trial court has refused to permit an insurer to diminish its obligation to pay defense costs by allocating costs with the insured to reflect uninsured periods of injury.  In Imperial Cas. Co. v. State of Connecticut, 1996 WL 469733 (Conn. Super. August 6, 1996), Judge Freed ruled that there was no precedent for this in Connecticut, even though the insurer had only been declared to owe coverage for two of the twelve years in which injurious conduct was alleged on the part of the insured.

  A state trial court ruled in Reichhold Chemicals, Inc.  v.  Hartford Accident & Indemnity Co. ,  1999 Conn.  LEXIS 280 (Conn.  Super.  February 11,  1999) that New York law mandated a pro rata allocation of the insured’s claims.  Despite Reichhold’s argument that Stonewall had been overruled by the Second Circuit’s subsequent ruling in Prudential, Judge Aurigemma declared that Reichhold’s “pick and choose” theory of allocation would read out of the policy the requirement that damage take place during the policy period, contrary to the law of New York and Connecticut.   
     
  Where an insured entered in a separate settlement with Lumbermens releasing that insurer from any further duty to contribute towards the defense of the underlying asbestos suits, the insured could not compel its other insurers to absorb the costs formerly paid by Lumbermens and must, in effect, step into the shoes of the released insurer as if it had voluntarily “self-insured” for the released period.  Security Ins.  Co.  of Hartford v.  Lumbermens Mut.  Ins.  Co., 1999 Conn.  Super.  LEXIS 1902 (Conn.  Super.  July 12, 1999).  Consistent with the Second Circuit’s Stonewall analysis, however, the trial court refused to require Acmat to pay defense costs corresponding to years after 1985 in light of evidence that asbestos coverage was unavailable after that date.

  In United Technologies Corporation v. American Home Assurance Company, 2000 WL 1658327 (D. Conn. August 23, 2000),Judge Arterton declared that American Home was not entitled to a credit for the judgment against it based upon amounts that UTC had received from other insurers in earlier settlements in view of the fact that the site that had given rise to the award against American Home had earlier been dismissed from the suit in which the other insurers ultimately settled.
 

  APPELLATE PROCEDURES

  Connecticut has both a Court of Appeals and a state Supreme Court.
 

  BAD FAITH

  Unfair claims practices by insurers are prohibited under the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes §38a-815,816.   While a private cause of action under CUIPA has been recognized by some lower courts, such claims have, to date, not been sanctioned by the Connecticut Supreme Court.  Griswold v. Union Labor Life Ins. Co., 186 Conn. 597, 512 (1982).  However, an aggrieved insured may bring a cause of action for a CUIPA violation under the Connecticut Unfair Trade Practices Act (CUTPA), G.S. 42a-110 et seq.  An insurer may only be sued under CUTPA for violations of CUIPA.  Further, the insured must show that the CUIPA violation was committed with such regularity as to constitute a regular business practice of the insurer. Lees v. Middlesex Ins. Co., 229 Conn. 842 (1994); Mead v. Burns, 199 Conn. 651, 663 (1986).

  The Connecticut Supreme Court has declared that “[t]he examination of good faith and fair dealing in the settling of an insurance claim requires a case-by-case analysis.”  Verrastro v. Middlesex Ins. Co., 540 A.2d 693,699 (Conn. 1988).

  Connecticut has recognized an "independent cause of action in tort arising from the insurer's common law duty of good faith."  Buckman v. People Express, Inc., 203 Conn. 166, 170, 530 A.2d 596 (1987) and McCauley Enterprises v. New Hampshire Ins. Co., 716 F.Supp. 718, 721 (D. Conn. 1989).

  InGupta v. New Britain General Hospital, 687 A.2d 111, 122 (Conn. 1996), the Connecticut Supreme Court declared that “every contract carries an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement...Bad faith means more than mere negligence; it involves a dishonest purpose.”

  A third-party tort claimant has no right to assert bad faith claims against the tortfeasor’s liability insurer.  Scribner v.  AIU Insurance Company, 647 A.2d 48 (Conn.  Supp.  1994). 

  A federal district court judge award $16.5 million in punitive damages against a first party insurer in United Technologies Corp.  v.  American Home Assurance Co., No.  2:92cv267 (D. Conn.  June 5, 2000).   The court declared that AIG’s claim handling condduct, while not “evil,” had knowingly, purposefully and misleadingly engaged in reckless and wanton conduct in total disregard of its insurance rights.  The District Court took particular note of the fact that the insurer, while now raising numerous coverage defenses, had never denied coverage.  Further, although American Home had succeeded in dismissing the insured’s original Massachusetts litigation on the basis that it needed to conduct an investigation, it had never conducted such an investigation.  Further, although American Home had detailed procedures for investigating claims, such procedures had been totally ignored and all of these claims had been directly assigned to the law firm of Mound, Cotton & Wollan.  Even so, the law firm had never been requested to provide a coverage opinion.  In short, Judge Arterton concluded that American Home had acted in such a manner as to delay payment and therefore awarded $16 million, roughly reflecting the lost opportunity costs to the insured; the investment profits that AIG had earned on the money in the interim and a sufficiently large penalty, within the BMW factors as to deter other insurers from handling such claims in this manner in the future.

  The District Court also ruled that an insurer may be held liable not only for its denial of coverage but for its handling of the claim.  In United Technologies Corporation v. American Home Assurance Company, 2000 WL 1658321 (D. Conn. July 11, 2000), Judge Arterton declared that an insurer could be liable for both “substantive” as well as “procedural” bad faith even in cases where the insurer had never actually denied coverage based upon its delay and lack of responsiveness in handling the claim.  
 

  “BODILY INJURY”

  Allegations that the insured cheated the plaintiff by abusing her power of attorney and a line of credit, causing emotional distress, do not constitute a claim for “bodily injury.”  Moore v. Continental Casualty Company, 725 A. 2d 994 (Conn. App. 1999), aff’d,  2000 Conn. LEXIS 67 (Conn. March 24, 2000).  The Supreme Court declared that bodily injury required some physical harm.  Emotional distress, absent any physical manifestation, does not constitute “bodily injury, harm, sickness or disease” in their plain and ordinary meanings.
 

  BREACH OF POLICY CONDITIONS

  Insured that gives untimely notice must overcome a presumption that this delay has caused prejudice to the insurer.  Aetna Cas. & Surety Co. v. Murphy, 206 Conn. 409, 538 A.2d 219 (1988).  Time for giving notice begins when insured became aware of an "occurrence" or "reasonably should have knowledge of the event." Plasticrete Corp. v. American Policyholders Ins. Co., 184 Conn. 231, 439 A.2d 968 (1981).

  A Connecticut trial court has ruled that the same rules apply to claims for breach of the cooperation clause and voluntary payment situations.  In Risdon Corp. v. Hartford Acc. & Ind., Waterbury No. 109 163 (Conn. Super. April 21, 1994), the court ruled that the insured's settlement of various environmental liability claims prior to giving notice to its insurers would not defeat coverage if the insured could show that its conduct did not result in prejudice to its liability insurers.  The court refused to accept Travelers' argument that prejudice was not a required element of this coverage defense.
 

  BROAD FORM COVERAGES

  The leading case construing the scope of “advertising injury” or “personal injury” coverages is QSP, Inc.  v. Aetna Cas. & Sur. Co., No. 16269 (Conn. June 5, 2001) in which  the Connecticut Supreme Court ruled that claims by church and school groups that Reader’s Digest monopolized the market for school magazine subscription promotions through various predatory practices have been held to be outside the scope of “personal injury” or “advertising injury” coverages.  Notwithstanding the fact that the underlying suit had set forth claims for defamation, bad faith and unfair competition, the court ruled that  the labels that the plaintiffs attached to their causes of action did not control the availability of coverage, as the facts alleged in the complaints did not support a claim for defamation or any other covered “offense. The court also adopted the majority view that information must be broadly disseminated in order to be “advertising.” 

  The Connecticut Court of Appeals has ruled in Julian v. Liberty Mut. Ins. Co., No. 14727 (Conn. App. October 1, 1996) that patent infringement claims fail to allege a covered claim for "advertising injury."  The court refused to find that patent rights are a "title" within the policy's coverage for "infringement of copyright, title or slogan."  Further, the court held that the plaintiffs had failed to claim that their injury resulted from advertising activities.

  Likewise, in Lumberman’s Mutual Casualty Company v. Dillon Company, Inc., 2000 U.S. Dist. LEXIS 13830 (D. Conn. August 31, 2000), a federal district court ruled that “advertising injury” coverage for “infringement of copyright, title or slogan does not provide coverage for patent infringement claims.  

  Allegations that an employer made lewd and lascivious remarks to an employee who was later fired were held not to set forth a claim for “personal injury” since there was no “publication” of the offending material to a third party.  Springdale Donuts, Inc. v. Aetna Casualty & Surety Company, 724 A.2d 1117 (Conn. 1999).   

  Coverage for false arrest, wrongful imprisonment and the like cannot be limited to negligence claims.  Imperial Casualty & Indemnity Co.  v.  State of Connecticut, 714 A.2d 1230 (Conn. 1998).  Further, the insurer may not avoid coverage merely because the insured’s conduct involved facts sufficient to allege a violation of a penal statute if the insured was not accused on that basis or where other bases for liability exist.

  State trial courts have twice ruled that pollution liability claims are not a covered "offense." Linemaster Switch Corp. v. Aetna Cas. & Sur. Co., Hartford No. CV91-0396432S, 1995 Conn. Super. LEXIS 2229 (July 31, 1995) and Buell Industries, Inc. v. Greater New York Mutual Insurance Company, 2000 Conn. Super. LEXIS 2299 (Conn. Super. August 10, 2000), appeal pending (Conn. 2001).
 

  BURDEN OF PROOF
 
  An insured may recover under a missing policy if it proves the existence and material terms of the policy.

  Insurer must demonstrate applicability of policy exclusion.  Firestine v. Poverman, 388 F.Supp. 948 (D. Conn. 1975).  However, the Connecticut Supreme Court ruled in Breen v. Aetna Cas. & Sur. Co., 220 A.2d 254, 153 Conn. 633 (1966) that an insured that sought to establish coverage on the basis of waiver or estoppel had the burden of proving its claim.

  In EDO Corp. v. Newark Ins. Co., 878 F.Supp. 366 (D. Conn. 1995), the District Court ruled that insurers have the burden of proof with respect to showing that discharges are not within the "sudden and accidental" exception to the pollution exclusion. Judge Aurigemma has since disagreed, ruling in Schilberg Integrated Metals v. Continental Casualty Company, New Britain No. XO3 CV 98 0499554 (Conn. Super.  April 17, 2001) that an insured has the burden of proving “sudden and accidental.  
 

  CHOICE OF LAWS

  "Most significant contacts" test adopted in Reichhold Chemicals, Inc. v. Hartford Accident & Indemnity Co., 243 Conn. 401 (1997).  In abandoning the traditional lex loci contractus approach, the Supreme Court declared that insurance coverage claims would generally be interpreted in accordance with the state in which the bulk of the contracting transactions took place but that, in the case of liability policies, unless another state has an overriding policy-based interest in the application of its law, the law of the state in which the insured risk is located should be applied.  As a result, the Supreme Court declared that a trial court had erred in applying New York law to late notice issues involving pollution claims at the insured's facility in Tacoma, Washington.

  Two years later, the court declared that choice of law disputes will be resolved based on the location in which the insured risk is located.  In  Reichold Chemicals, Inc. v. Hartford Accident and Indemnity Company, 750 A.2d 1051, 1054-1055 (Conn. 2000), the court ruled that the availability of coverage for environmental liability claims involving a site in Washington state must be judged in accordance with Washington law, not the law of New York.  In ruling that Judge Aurigemma erred in granting summary judgment for various insurers based on New York law, the Connecticut Supreme Court declared that Washington’s interest in cleaning up pollution far outweighed any interest New York might have as the place where the policies were contracted for.

  A federal district court has since ruled that this “location of the insured risk” approach required the application of Connecticut law to the issue of “advertising injury” coverage as the underlying suit was filed in Connecticut, even though the policy was issued in Rhode Island to a Rhode Island business.  Lumberman’s Mutual Casualty Company v. Dillon Company, Inc., 2000 U.S. Dist. LEXIS 13830 (D. Conn. August 31, 2000).

  Earlier cases had ruled that such decisions would be governed by place of contracting, unless the contract is to have its operative effect or place of performance in a jurisdiction other than the one where it was entered into, in which event the law of the state of operative effect or performance governs its validity and construction.  Whitfield v. Empire Mutual Ins. Co., 167 Conn. 499, 505-506, 356 A.2d 139, 143 (1975);  See also Breen v. Aetna Cas. and Surety Co., 153 Conn. 633, 637, 220 A.2d 254, 256-257 (1966); Grand Sheet Metal Products Co. v. Aetna Cas. and Surety Co., 500 F.Supp 904, 908-9 (D. Conn. 1980); and Masarjian v. Mark Lighting Fixtures Co., Inc., 595 F.Supp. 869, 870 (D. Conn. 1984).
 

  "DAMAGES"
 
  In 1997, the Connecticut Supreme Court declined to answer a certified question as to whether CERCLA response costs are covered "damages."  The Eastern Co. v. Liberty Mutual Ins., No. 3:94CV1283 (D. Conn. March 20, 1997). 
  Pending a ruling from the state Supreme Court, lower court rulings are in conflict.  A U.S. District Court has ruled that CERCLA response costs are "damages."  Stamford Wallpaper v. TIG Ins. Co., No. 3:95CV00058 (D. Conn. June 7, 1996), aff'd on other grounds No. 96-9218 (2d Cir. February 25, 1998).  Accord Carrier Corp. v. The Home Ins. Co., Hartford-New Britain No. CV-88-352383 (Conn. Super. November 3, 1994) and Timex Corp. v. Home Ins. Co., Waterbury No. CV 960136334S (Conn. Super. Ct. June 2, 1998)(New York law).  But see, Linemaster Switch Corp. v. Aetna Cas. & Sur. Co., Hartford No. CV91-0396432S (Conn Super. July 31, 1995)(rejecting insured's argument).

  The U.S. District Court has ruled that employees' suit for restitution of wrongfully withheld workmen's compensation benefits was not for "damages."  City of West Haven v. Liberty Mutual Ins. Co., 639 F.Supp. 1012 (D. Conn. 1986).  

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  DECLARATORY RELIEF

  A Connecticut trial court permitted an insurer to intervene for the purpose of proposing special interrogatories to allocate damages between covered and non-covered claims in Knowling v. Hunt, 577 A.2d 1144 (Conn. Super. 1990).  But see Chenkus v. Dickson, 1990 WL 283216 (Conn. Super. September 7, 1990)(holding that risk of jury confusion outweighed judicial economy of allowing insurer to resolve coverage issues in the same proceeding as its insured’s tort liability).

  As yet, no Connecticut court has permitted a policyholder to recover its fees for suing its insurers.  See Buell Industries, Inc. v. Greater New York Mut. Ins. Co., 2000 Conn. Super. LEXIS 2299 (Conn. Super. July 21,1999)(an insured has no right to claim fees in a coverage law suit, nor are insurers obliged to reimburse such fees pursuant to the “supplementary payment” provisions in a general liability policy).
 

  DIRECT ACTION CLAIMS

  §38a-321 permits a judgment creditor to bring a direct action against liability insurer if a judgment remains unsatisfied by the insured after thirty days.
 

  DISCOVERY ISSUES

   –Attorney-Client Communications

  The Connecticut Supreme Court ruled in Metropolitan Life Insurance Company v.  Aetna Casualty & Surety Company, 1999 Conn.  LEXIS 148 (Conn.  May 25, 1999) that a policyholder did not put attorney client communications at issue merely by suing to recover monies.  The court also ruled that insurers could not compel discovery on the basis of the “common interest doctrine” or the cooperation clause in their policies.

   --Claims Manuals
 

   --Drafting History

  Supreme Court held that discovery concerning drafting history of absolute pollution exclusion was not a basis for finding a claimed latent ambiguity in Heyman Assoc. No. 1 v. The Ins. Co. of the State of Pennsylvania, 231 Conn. 756, 653 A.2d 122 (1995).
 

  A federal district court has distinguished Heyman as not applying where the parol evidence is meant to clarify an ambiguity in the policy.  Young v.  Liberty Mutual Insurance Company, 1999 U.S. Dist.  LEXIS 6987 (D.  Conn. February 27, 1998)(allowing extrinsic evidence to explain meaning of “as damages,” “sudden and accidental” and other environmental coverage defenses).
 

   --Other Policyholder Claims

  Permitted in Young v.  Liberty Mutual Insurance Company, 1999 U.S. Dist.  LEXIS 6987 (D.  Conn. February 27, 1998)(ten and ten production).

   --Reinsurance Information

  Permitted in Young v.  Liberty Mutual Insurance Company, 1999 U.S. Dist.  LEXIS 6987 (D.  Conn. February 27, 1998).

   --Reserves

  Permitted in Young v.  Liberty Mutual Insurance Company, 1999 U.S. Dist.  LEXIS 6987 (D.  Conn. February 27, 1998).
 

  DUTY TO DEFEND

  The question of an insurer’s duty to defend is purely a question of law which may be determined by a court by comparing the allegations of the plaintiff’s complaint with the terms of the insurance policy.  Moore v. Continental Casualty Company, 746 A.2d 1252 (Conn. 2000).  If the complaint sets forth a cause of action within the coverage of the policy, the insurer must defend.  Springdale Donuts, Inc. v. Aetna Casualty & Surety Company of Illinois, 724 A.2d 1117 (Conn. 1999).  

  The question of an insurer's duty to defend "depends on whether the complaint in that action stated facts which appeared to bring the [claimant's] injury within the policy coverage."  Missionaries of the Co. of Mary, Inc. v. Aetna Cas. & Sur. Co., 155 Conn. 104, 110, 230 A.2d 21, 24 (1967) and Providence Washington Ins. Group. v. Albarello, 784 F.Supp. 950 (D. Conn. 1992).  The insurer is not relieved of such a defense obligation by obtaining information from the insured or other sources suggesting that the claims are, in fact, not covered. Missionaries of the Co. of Mary, supra, citing, Lee v. Aetna Cas. & Sur. Co., 178 F.2d 750, 751 (2d Cir. 1949).

  The duty to defend has been held to extend to an obligation to appeal where reasonable grounds for an appeal exist.  City of West Haven v. Commercial Union Ins. Cos., 894 F.2d 540, 545 (2nd Cir. 1990).

  An insurer that is found to have breached its defense obligation is liable to the policyholder for the full amount of obligation reasonably incurred by the insured as a consequence of the breach.  Missionaries of the Co. of Mary, supra.

  U.S. District Court has twice ruled that governmental claims letters under CERCLA are a "suit." See EDO Corp. v. Newark Ins. Co., 898 F.Supp. 952 (D. Conn. 1995) and Stamford Wallpaper v. TIG Ins. Co., No. 3:95CV00058 (D. Conn. June 7, 1996), aff'd on other grounds, 138 F.3d 75 (2d Cir. 1998).  But see, Linemaster Switch Corp. v. Aetna Cas. & Sur. Co., Hartford No. CV91-0396432S (Conn Super. July 31, 1995)(claim letters not a "suit" since not a proceeding in a court of law).
 

  ESTOPPEL AND WAIVER

  In order to prove waiver, an insured must show that the insurer "engaged in conduct that may reasonably be found to have constituted an intentional relinquishment of a known right."  Olean v. Treglia, 190 Conn. 756, 772, 463 A.2d 242 (1983).  Estoppel, on the other hand, requires proof that the insured reasonably relied to its detriment on some assurance or promise from the insurer.  O'Sullivan v. Bergenty, 214 Conn. 641, 573 A.2d 720 (1990); Hanover Ins. Co. v. Fireman's Fund Ins. Co., 217 Conn. 340, 351, 586 A.2d 567 (1990).

  Connecticut courts have refused to permit insureds to use waiver or estoppel as a basis for creating coverage for risks that were never meant to be insured.  Breen v. Aetna Cas. & Sur. Co., 153 Conn. 663, 220 A.2d 254 (1965) and Heyman Assoc. No. 1 v. The Ins. Co. of the State of Pennsylvania, (Conn. Super. February 24, 1993), aff'd on other grounds, 231 Conn. 756, 653 A.2d 122 (1995) (pollution exclusion not waived by insurer's delay of a few months in denying claim).

  EXCESS INSURERS

  In general, Connecticut courts have not required excess insurers to drop down in the case of insolvent primary insurers.  Veterans Memorial v. Kahn Insurance Guaranty, 1996 WL 63264 (Conn. Super. 1996).  See also Mingione v. Western World, 1994 WL 728782 (Conn. Super. 1994) (excess insurer owes no contractual obligation until primary insurance is exhausted).

  Federal court ruled in Continental Cas. Co. Pullman, Comley, 929 F.2d 103 (2d Cir. 1991) that an excess insurer was not the intended beneficiary of defense counsel appointed by primary carrier and therefore could not bring a malpractice claim.  

  In late 2000, the U.S. Court of Appeals for the Second Circuit asked the Connecticut Supreme Court to say whether language in an umbrella policy requiring the insured to maintain underlying insurance as a condition of obtaining UIM coverage was ambiguous for failing to clearly state whether a failure to maintain primary insurance negated the excess insurer’s obligations entirely or merely required the insured to bear that portion of the loss that the primary would have paid.  Isreal v. State Farm Mut’l Automobile Ins. Co., No. 99-7810 (2nd Cir. December 27, 2000).
 

  FIRST PARTY/ENVIRONMENTAL

  Pollution to insured's soil not covered since definition of "covered property" excludes land.  Bell Power Systems, Inc. v. Hartford Fire Ins. Co., Middlesex No. CV92-0065538 (Conn. Super.  February 15, 1995).  Court further rules that claim is outside scope of policy's coverage for debris removal.

 
  NUMBER OF OCCURRENCES

  In Metropolitan Life v. Aetna Cas. & Sur. Co. 225 Conn. 295, 765 A.2d 891 (2001), the Connecticut Supreme Court was asked to consider how many “occurrence” were presented by suits by asbestos claimants who alleged that Metropolitan had failed to disclose information that it had obtained as the health insurer for Johns-Manville and other asbestos manufacturers concerning the health risks of asbestos.  Metropolitan urged the Supreme Court to reverse a lower court’s ruling that each claimant was a separate “occurrence” as such a ruling would largely negate the value of its insurance given the large “per occurrence” retentions for which the insured was responsible.  Nevertheless, the Supreme Court ruled on February 6, 2001 that each asbestos bodily claim against Metropolitan was a separate “occurrence” for which it must satisfy a separate “per occurrence” deductible before it can obtain coverage from its third party liability insurers.  In rejecting Metropolitan’s contention that its alleged failure to disclose its knowledge of the health risks posed by asbestos, the court ruled that the “cause” of the plaintiffs’ injuries was not Metropolitan course of conduct but rather the exposure to airborne asbestos fibers.  The court concluded that the operative terms in the defendants’ insurance policies were unambiguous and that the “cause” of the underlying claimants’ asbestos injuries was not Metropolitan’s alleged failure to warn but rather each claimant’s exposure to asbestos fibers.  The court ruled that the policy terms could not plausibly be read to combine “hundreds of thousands of exposures that occurred under different circumstances throughout the country over a period of 60 years into one occurrence.”  

  Earlier, the Supreme Court had ruled in Connecticut Ins. Guaranty Association v. Union Carbide Corp., 217 Conn. 371, 585 A.2d 1216 (1991) that each injured Bhopal plaintiff was a separate claim for purposes of computing the amount owed by the Guaranty Association following the insolvency of Union Carbide's primary insurer.

  In United Technologies Corp.  v.  American Home Assurance Co., No.  2:92cv267 (D. Con.  February 11, 1999), Judge Arterton ruled that the $16.3 million judgment must be reduced by seven “occurrence” deductibles, not eighteen deductibles as the insurers had contended.  Accordingly, the original $16.3 million verdict was reduced to $14.1 million.  The court ruled that the jury’s findings had been based upon the insured’s proof of loss or damage to seven different distinct areas of the Windsor Locks site.  

  In Mohawk Mountain Ski Area, Inc. v. American Home Assurance Company, Litchfield No. 056905 (Conn. Super. January 30, 1995), a state trial court ruled that two tornados, striking within 45 minutes of each other, could not constitute a single “occurrence” as a matter of law.
 

  POLLUTION EXCLUSION

  In January 2001, the Connecticut Supreme Court announced that it had taken direct appellate review of  Buell Industries, Inc. v. Greater New York Mutual Insurance Company, 2000 Conn. Super. LEXIS 2299 (Conn. Super. August 10, 2000), in which Judge Koletsky ruled that the exclusion unambiguously precluded coverage for gradual contamination.

  Pending a ruling from the state Supreme Court authority, Connecticut courts have generally given effect to the exclusion. In particular, the Second Circuit ruled in Stamford Wallpaper, Inc. v. TIG Insurance Co., 138 F.3d 75 (2d Cir. 1998) that a liability insurer had no duty to provide a defense to Superfund claims against a waste generator in the absence of any suggestion in the underlying claims that the sources of pollution were abrupt or otherwise "sudden."    The court agreed that "sudden" has a temporal meaning under Connecticut law and that there was nothing "accidental" about the intentional disposal of the insured's waste through third parties.  The court distinguished its 1994 Blank ruling, in which it had suggested that there was a duty to defend unless the insurer could establish the impossibility of there having been a sudden and accidental release, noting a court should not look beyond the four corners of the complaint to speculate as to what might have been alleged if no "sudden and accidental" source is actually alleged.  "The pollution exclusion would lose all force if it could be defeated by the mere imagining of any sudden accident that is not actually foreclosed by the allegations of the underlying complaint."   Accord, Linemaster Switch Corp. v. Aetna Cas. & Sur. Co., Hartford No. CV91-0396432S (Conn Super. July 31, 1995) and  Schilberg Integrated Metals v. Continental Casualty Company, New Britain No. XO3 CV 98 0499554 (Conn. Super.  April 17, 2001).  

  A temporal meaning of "sudden" was also adopted by the U.S. District Court in EDO Corp. v. Newark Ins. Co., 878 F.Supp. 366 (D. Conn. 1995).  The insured sought coverage for the cost of cleaning up a well field that was allegedly contaminated by the insured's discharge of TCE-degreasing agents on its property over a period of years.  Judge Nevas ruled that "sudden" has a temporal meaning, particularly when juxtaposed with "accidental."  the court refused to consider extrinsic evidence of "drafting history" where the terms of the contract are plain on their face.  However, Judge Nevas did rule that insurers have the burden of proof with respect to showing that discharges are not "sudden and accidental."   Following further briefing, the court ruled EDO Corp. v. Newark Ins. Co., 898 F.Supp. 952 (D. Conn. 1995) that EDO's insurers have a duty to defend since the allegations set forth in the EPA "suit" do not preclude the possibility of "sudden and accidental" discharges.  The court rejected the insurers' contention that he should consider various EPA site studies referenced in the PRP letter, finding that these were outside the "four corners" of the complaint.  However, the court ruled that the actual facts precluded any contractual indemnity obligation.

  A state court applying New York law has ruled that the insured's intentional shipment of wastes to disposal sites was not "sudden and accidental" in Reichold Chemical, Inc. v. Hartford Acc. & Ind. Co., New Britain No. CV 88-0351982 (Conn. Super. November 29, 1993).  However, on June 27, 1994, the Reichold court also ruled that the "sudden and accidental" exception to the exclusion would be rendered meaningless unless the court also looked to factors such as the integrity and durability of the containers in which the waste was delivered.  In a separate order, Judge Sullivan similarly ruled that the dumping of drums at a landfill might be "accidental" if the discharges resulted from the landfill losing its "containment ability through accidental trauma."   

  Out of state courts have suggested that Connecticut find that the exclusion is unambiguous.  In Olin Corp. v. INA, 762 F.Supp. 548 (S.D.N.Y. 1991), a New York court opined that, whether viewed under the law of Connecticut or New York, discharges of DDT from the insured's plant on a routine basis over a period of more than 16 years would not be deemed "sudden and accidental."  Similarly, in Remington Arms Co. v. Liberty Mutual Ins. Co., 810 F.Supp. 1406 (D. Del. 1992), Judge Latchum predicted that the Connecticut Supreme Court would adopt the interpretation of the pollution exclusion set forth by the Third Circuit in New Castle County, wherein deliberate discharges are excluded, whether or not the actor knows that the discharges substances are contaminants or pollutants.  The court ruled, however, that the burden of proving that the discharges were not "sudden and accidental" must be borne by the insurer. 
  A Connecticut trial court suggested in dicta that the "sudden and accidental-type exclusion was only intended to apply to "active industrial polluters that knowingly emit pollutants over extended periods of time" and therefore would not exclude coverage for a spill from a broken fuel pipe on the insured's property.  Heyman Assoc. No. 1 v. The Ins. Co. of the State of Pennsylvania, Hartford (Conn. Super. February 24, 1993), affirmed on other grounds, 231 Conn. 756, 653 A.2d 122 (1995).  On reconsideration, the same court rejected the insured's effort to claim that exclusion in question had not been approved by state regulators.  

  Judge O'Neill refused to apply a "regulatory estoppel" challenge to the pollution exclusion to insurers that were not members of the IRB or other trade associations that allegedly misrepresented the scope of the exclusion to state insurance regulators in 1970.  In denying the insurer's motion for summary judgment in Carrier Corp. v. The Home Ins. Co., Hartford-New Britain No. CV-88-352383 (Conn. Super. September 21, 1994), the Superior Court also ruled that gradual damage resulting from an abrupt accident would be within the exclusion's "sudden" exception.

  "Absolute" exclusion upheld by Connecticut Supreme Court in Heyman Assoc. No. 1 v. The Ins. Co. of the State of Pennsylvania, 231 Conn. 756, 653 A.2d 122 (1995).  The court ruled that fuel oil that leaked out of a broken pipe on the insured's property and discharged into Stamford Harbor was clearly a "pollutant" subject to the exclusion.  Accord  FJS Corp. v. United National Ins. Co., 1998 Conn. Super. LEXIS 743 (Conn. Super. Ct. March 19, 1998)(claim against real estate broker for failing to disclose facts involving existence of contamination on property sold to plaintiff); Bell Power Systems, Inc. v. Hartford Fire Ins. Co., Middlesex No. CV 92 0065538 (Conn. Super. February 17, 1995)(leaking oil tank); Thompson v. Merchants Mutual Ins. Co., CV 93 00643014 (Conn. Super. February 17, 1995)(claims by neighbors for pollution emitted by insured in course of ceramic manufacturing operations).  See also Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118 (2d Cir. 1990)(leaking fuel oil held excluded). 

  In Schilberg Integrated Metals v. Continental Casualty Company, New Britain No. XO3 CV 98 0499554 (Conn. Super.  April 17, 2001), a state trial court refused to estop CNA from asserting this exclusion even though the insurer had allegedly failed to obtain state regulatory approval for the exclusion.

  An exclusion for any "exposure to, or contact with lead contained in goods, products or materials" has been held by the Connecticut Supreme Court to bar coverage for lead poisoning claims against a landlord in Peerless Ins. Co. v. Gonzales, 241 Conn. 976 (1997).  By contrast, an absolute pollution exclusion was held not to apply to lead paint claims in Danbury Ins. Co. v. Novella, 1998 Conn. Super. LEXIS 3266 (Conn. Super. November 13, 1998)(exclusion limited to “industrial” or “environmental” pollution).
 

  PROPERTY DAMAGE

  Claims for economic loss were held not covered in Liberty Mutual Ins. Co. v. Consolidated Milk Producers, 354 F.Supp. 879, 882 (D.N.H. 1973)(under Connecticut law, business losses, including claims for lost profits and good will, are not "property damage").  

 
  PUNITIVE DAMAGES

  Insurable if as part of a compensatory award but not if awarded for a punitive purpose.  American Ins. Co. v. Saulnier, 242 F.Supp. 257 (D. Conn. 1965) and Tedesco v. Maryland Cas. Co., 127 Conn. 533, 18 A.2d 357 (1941).  See also Bodner v. USAA, 610 A.2d 1212 (Conn. 1992).

 
  REGULATION OF INSURANCE
 
  Connecticut General Statute 38A-676(c) requires an insurer to file all policy forms with the Insurance Commissioner prior to the issuance of the policy. In Cage v. Litchfield Mutual Fire Ins. Co., 45 Conn. Supp. 298, 713 A.2d 281 (1997), a Connecticut trial court has ruled that a farmowner's insurer did not commit bad faith or fraud in relying on an exclusionary endorsement that had inadvertently not been filed with the Connecticut Insurance Department and which have been satisfactory had it been filed.  The Superior Court declared that an otherwise lawful exclusion would not be rendered void or unenforceable owing to an administrative failure to file the form with the Insurance Commissioner in a timely fashion.

  
  STANDARDS FOR POLICY INTERPRETATION

  The provisions of an insurance policy must be considered in context and cannot be “construed in a vacuum.”  They should be construed from the perspective of a reasonable lay person in the position of the purchaser of the policy.  Ceci v. National Indemnity Company, 622 A.2d 545 (Conn. 1993).

  An insurance policy should be construed, as with all other contracts, to give effect to all of its provisions.  O’Brien v. USF&G, 669 A.2d 1221(Conn. 1995); and Dobuzinsky v. Middlesex Mutual Assurance Company, 714 A.2d 702 (Conn. App. 1998).

  There is no presumption that language in insurance policies is inherently ambiguous.  McGlinchey v. Aetna Casualty & Surety Company, 617 A.2d 445 (Conn. 1992).  “Ambiguity in a contract must emanate from the language used in the contract rather than from one party’s subjective perception of the terms.”  Tremain v. Tremain, 663 A.2d 387 (Conn. 1995).  The mere fact that the parties advance contrasting interpretations of a policy term does not mandate a finding that the language is ambiguous. Stefan v. Pennsylvania General Insurance Company, 621 A.2d 258 (Conn. 1993).  

  The Connecticut Appeals Court suggested that Connecticut would adopt the "reasonable expectations" doctrine in Bouchard v. Travelers Ins. Co., 253 A.2d 497 (Conn. App.).  The general standard for interpreting policies was set forth by the Supreme Court in Izzo v. Colonial Penn Ins. Co., 203 Conn. 305, 309, 524 A.2d 641 (1987):  "An insurance policy is to be interpreted in accordance with the same general rules that apply to all contract and is to be enforced in accordance with the real intent of the parties as expressed in the language employed in the policy."  Where policy language is ambiguous or of "doubtful meaning," the construction most favorable to the insured will be adopted.  Schultz v. Hartford Fire Ins. Co., 569 A.2d 1131 (Conn. 1990). If the "terms of the policy are clear and unambiguous, then the language must be given its natural and ordinary meaning."  Gottesman v. Aetna Ins. Co., 418 A.2d 944, 946 (Conn. 1979); Cunningham v. Equitable Life Assur. Society, 652 F.2d 306, 308 (2d. Cir. 1981).  The court will not "torture words to import ambiguity" or find ambiguity "simply because lawyers or laymen contend for different meanings."  Hammer v. Lumberman's Mut. Ins. Co., 214 Conn. 573 (1990).

  Where a contract term is unambiguous, extrinsic evidence concerning its meaning is irrelevant.  Jurrius v. Maccabees Mut. Life Ins. Co., 587 F.Supp. 1301, 1304 (D. Conn. 1984); Griswold v. Union Labor Life Ins. Co., 442 A.2d 920 (Conn. App. 1982).

  In Heyman, the Connecticut Supreme Court rejected the insured's contention that it should be allowed to take discovery concerning the "drafting history" of pollution exclusions, holding that such discovery was contrary to the parol evidence rule and both irrelevant and inappropriate where policy language was unambiguous. See also EDO Corp. v. Newark Ins. Co., 878 F.Supp. 366 (D. Conn. 1995).

  The rule of contra proferentum will only apply in the event of a policy ambiguity.  Metropolitan Life Insurance Company v. Aetna Casualty & Surety Company, 225 Conn. 295, 765 A.2d 891 (2001).
 

  THEORIES OF ALTERNATIVE LIABILITY

  None adopted.
 

  TRIGGER OF COVERAGE

  Connecticut follows the majority rule that coverage is triggered when the claimant sustains actual damage and not when the act or omission that caused such damage was committed.  Landerman v. USF&G, 203 A.2d 150 (Conn. 1964)(no coverage defective ladder sold during policy period but did not cause injury until after policy expired).  Although the Connecticut Supreme Court has not enunciated a "trigger" for latent injury claims, a federal district court opined that Connecticut would follow New York's "injury in fact" trigger in a DES case. Aetna v. Abbott Laboratories, Inc., 636 F.Supp. 546 (D. Conn. 1986).    

  In the Carrier litigation, the Superior Court adopted an "actual injury" on November 3, 1994, finding that a release of pollution on a person's property creates an inference of property damage subject to the ability of the insurer to show that the pollution was either so minor or so quickly eliminated by nature that no damage in a legal sense ever occurred.  Judge O'Neill refused to adopt a more expansive jury instruction proposed by Carrier that would have triggered  all policies in effect "from commencement of a progressive environmental property damage process to the end of that process." 

  While agreeing that a “discovery rule” should apply to the determination of when first party coverage is triggered for damage to the foundation of the insured’s home, the First Circuit has declared in Parker v. Worcester Ins. Co. No. 00-1815 (1st Cir. April 23, 2001) that a district court erred in granting summary judgment to the insurer based on the policyholder’s failure to bring suit within one year of the date that cracks in the foundation first appeared.  While agreeing that little law existed on this point in Connecticut or elsewhere, the First Circuit declared that the time for filing suit should be tolled until such time as the full extent of the damage became apparent.

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