The California Supreme Court issued its decision in the State of California v. Continental Insurance case on August 9. In a unanimous opinion, written by Justice Ming Chin, the Court held that the policy language at issue provides for “all sums” allocation and permits stacking of policy limits.
The Court’s opinion reflects a focus on the particular insurance policy wording at issue. In its first holding, the opinion states: “Under the CGL policies here, the plain ‘all sums’ language of the agreement compels the insurers to pay ‘all sums which the insured shall become obligated to pay. . . for damages . . . because of injury to or destruction of property ….” The Court went on to hold that the policy language before it “does not limit the policies’ promise to pay ‘all sums’ of the policyholder’s liability solely to sums or damage ‘during the policy period.’”
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The California Supreme Court has set oral argument in State of California v. Continental Insurance Co. for May 30, 2012 at 9:00 a.m. in San Francisco.
This case presents two issues for review by the Court: (1) the so-called “all sums” issue, and (2) “stacking” of policy limits. First, when continuous property damage occurs during the periods of several successive liability policies, can each insurer be liable for all damage both during and outside its policy period, up to the amount of the insurer’s policy limits, or is each insurer only liable for property damage that took place during its policy period? Second, if each insurer can be liable for damage taking place outside its policy period, can the insured “stack” policy limits – that is, can the insured recover the combined limits of successive policies?
Philip R. Matthews and William J. Baron of Duane Morris submitted an amicus curiae brief in the case, on behalf of certain London Market Insurers.