April 1, 2000
Policyholders across the country let out a collective sigh of relief when the California Supreme Court—unanimously—granted review of Certain Underwriters at Lloyd’s London v. Superior Court (“Powerine”). The grant of review eliminates the precedential value of the lower appellate court opinion pending the decision of the California Supreme Court. Prior to this grant of review, the lower appellate court opinion provided insurance companies with arguments which struck at the very heart of environmental health and safety regulatory policy. Since the decision in Powerine was published, liability insurance companies have argued that they have no obligation to pay to clean up environmental damage under policies they sold unless an in-court formal lawsuit has been filed against the policyholder. These insurance company arguments are seriously flawed because they ignore the liability insurance policy language which requires insurance companies to pay “all sums” a policyholder becomes legally obligated to pay.