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United States Mineral Products Company v. American Insurance Company3/7/2002
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: October 3, 2001
In this declaratory judgment action between a manufacturer of asbestos-containing products and its insurers, we examine the issue of whether an extension of an excess-coverage insurance policy for a shortened period less than the original policy period creates an additional set of aggregate policy limits. We also consider the question of whether that policy provides a single per occurrence limit regardless of the number of aggregate limits provided.
At the request of plaintiff, United States Mineral Products Company (USM), defendant, Twin City Fire Insurance Company (Twin City), issued an endorsement to its existing excess-coverage policy extending coverage for a two-week period, with all other terms of the existing policy to remain the same, in return for a prorated premium, to allow USM's excess-coverage insurance program to coincide with expiration of USM's underlying primary-coverage policies.
We hold that in the absence of unambiguous policy language to the contrary, an insured who pays a prorated premium for insurance coverage for an additional period with all other terms of the policy to remain the same would reasonably expect that such a prorated premium reflects only the insurer's reduced time on the risk, not a reduction in the policy's aggregate coverage limits. Accordingly, the two-week short-term policy extension issued here is construed as containing the same aggregate coverage limit as provided in the original excess-coverage insurance policy.
We also hold that in accordance with the reasoning set forth in Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437 (1994) and Carter-Wallace, Inc. v. Admiral Ins. Co., 154 N.J. 312 (1998), the subject Twin City excess-coverage policy provides a separate per occurrence limit for each of the policy's aggregate periods.
These issues arose in the following factual and procedural context. From 1954 through 1971, USM or its predecessor companies manufactured products containing asbestos. More than 15,000 asbestos-related cases have been filed against USM nationally in which claimants have alleged personal injuries arising from alleged exposure to asbestos or asbestos-containing products manufactured and sold by USM. Additionally, more than 200 asbestos-related cases have been filed against USM alleging property damage due to installation of asbestos-containing products manufactured and sold by USM in buildings throughout the country. Approximately 500 asbestos-related cases have been instituted against USM in the courts of New Jersey.
USM was insured under various primary, umbrella, and excess standard-form comprehensive general liability (CGL) insurance policies covering personal injury and property damage caused by use of its products. Twin City, along with several of the insurer defendants, sold USM multi-period excess-coverage policies that included policy periods of less than one year.
On July 8, 1992, USM filed a declaratory judgment action against fourteen insurance companies from whom it had purchased primary, umbrella, and excess-coverage general liability insurance policies, including Twin City, seeking a defense and coverage concerning thousands of claims made against it for asbestos-related personal injury and property damage allegedly sustained as a result of the use of asbestos-containing products manufactured and sold by USM.
Relevant to the specific coverage issues between USM and Twin City, USM moved for entry of partial summary judgment against defendant, Puritan Insurance Company, on the issue of whether the issuance by Puritan of an e
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