Chubb must face chemical firm’s coverage litigation

A federal district court has refused to dismiss coverage litigation filed by a chemical company against a Chubb Ltd. unit over its refusal to pay environmental and personal injury claims under its excess policy.
Rosemont, Illinois-based Velsicol Chemical L.L.C., which is seeking coverage in connection with numerous sites, filed suit against Westchester Fire Insurance Co., a unit of Warren Township, New Jersey-based Chubb for breach of contract, seeking defense and indemnity coverage under its excess policy, according to Thursday’s ruling by the U.S. District Court in Chicago in Velsicol Chemical, L.L.C. v. Westchester Fire Insurance Co.
A Velsicol consultant has estimated its expenditures in connection with its claimsabout its claims have exceeded $170 million, according to the ruling. The policy covers the period January 1983 to January 1986.
In moving for summary judgment in the case, Westchester argued the claims were untimely, that a pollution exclusion applied and that it was not obligated to provide coverage because the primary policies had not been exhausted.
The District Court rejected these arguments. On the pollution exclusion, Westchester had argued coverage is precluded because the pollution at issue does not fall under the pollution exclusion’s “sudden and accidental” exception.
The company “has demonstrated genuine issues of material fact pertaining to whether releases were sudden or accidental,” said the ruling. The court ruled similarly on the other two issues, in denying Westchester’s motion for summary judgment.

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