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Nossaman Partner Joan Cotkin Quoted in Law360 on Policy Exhaustion Case

12/06/2017 Law360

Partner Joan Cotkin was quoted in the Law360 article, “Calif. Justices May Ease Policyholders’ Road To Recovery.” The article reviews the key issues at stake in the Montrose Chemical Corp. v. Superior Court (Canadian Indemnity et al) BC 005158 case which the California Supreme Court has recently agreed to hear. The justices will determine how to resolve the following question: "When continuous property damage occurs during several periods for which an insured purchased multiple layers of excess insurance, does the rule of 'horizontal exhaustion' require the insured to exhaust excess insurance at lower levels for all periods before obtaining coverage from higher-level excess insurance in any period?" 

In the article, Ms. Cotkin weighed in on this important issue, opining that "With 'mandatory horizontal exhaustion,' the insurers are trying to create something brand new that is a huge barrier to recovery for policyholders that have been cautious enough to buy coverage over a period of many years." 

In a landmark 2012 case, State of California v. Continental Insurance Co., it had been decided by the high court that when a continuous injury triggers multiple policies, each policy can be called on to respond to a claim up to the policy limits. Ms. Cotkin had represented the State of California, and Montrose cited this case upon appeal. Ms. Cotkin said that the coverage-maximizing intent of the Continental case would be conflicted if the Supreme Court rules in favor of the insurers and forces a mandatory horizontal exhaustion.

"Under Continental, policyholders have the legal right to select the column of insurance they want to pay for a claim," Cotkin said. "Otherwise, it is a huge burden on the policyholder. In this case, like many cases, the policies over the decades vary in their terms, exclusions and deductible arrangements."

The full article can be read here.

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