Usually, insurers are responsible for a pro rata share of coverage for continuous environmental contamination, based on the effective years of their policies, explained Robert D. Chesler, a shareholder with Anderson Kill & Olick PC who practices in insurance and environment law. Farmers argued that the association had to cover Newark's share of the remediation costs.
However, the appellate division in July 2011 found that, based on a 2004 amendment to the New Jersey Property Liability Insurance Guaranty Association Act, all other insurance had to be exhausted before the state-created association has any liability.
The decision represents a break with prior law in the state, according to Chesler, who said how the Supreme Court handles this issue of statutory interpretation could prove significant in future cases related to environmental cleanup coverage.
“The case will result in a major statement on trigger and allocation law in New Jersey,” Chesler said.