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New York Appellate Division Holds Insurer Is Not Required to Indemnify its Insured for Periods in Which Pollution Coverage Was Not Available

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Keyspan Gas East Corp. v. Munich Reinsurance Am., Inc., 2016 WL 4543479 (N.Y. App. Div. 1st Dep’t Sept. 1, 2016). New York’s Appellate Division, First Department held that Century Indemnity Co. is not required to indemnify gas producer Keyspan Gas East Corporation for environmental cleanup costs arising out of time periods when pollution liability coverage was not available on the market. Keyspan and its predecessors owned manufactured gas plants that deposited hazardous waste into surrounding groundwater over a period of many decades. Keyspan sought indemnification from Century for the time that it held a general liability policies with the insurer, 1953 through 1969, and also for the period of time during which such insurance was unavailable in the market. The lower court held that that a pro rata time on the risk allocation formula was appropriate to determine each insurers’ respective liability, and that Century was liable for damage that occurred during the periods in which insurance coverage was not available.

On appeal, the First examined the relevant language of the policies that explicitly stated in some policies that “the policy applies only to occurrences . . . during the policy period” and in other policies that the policies applied to “property damage . . . which occurs anywhere during the policy period.” Thus, the Appellate Division reversed the lower court and held that “Century is not responsible for any part of the cleanup for periods of time when insurance was unavailable