Benzene-Related Personal Injury Claims Subject to Exposure Trigger According to State Supreme Court
For bodily injury claims arising from exposure to benzene contained in an insured’s products, general liability insurance policies on the risk when the claimant is exposed to the benzene are triggered according to the North Carolina Supreme Court in one of the few appellate court decisions, and the first state supreme court decision, to address the trigger issue in benzene bodily injury cases. Radiator Specialty Co. v. Arrowwood Indem. Co., 881 S.E. 2d 597 (N.C., December 16, 2022).
The court rejected alternative trigger theories including “manifestation” or “continuous” trigger. Because injury happens at or shortly after exposure to benzene, it is those policies covering the insured during the claimant’s exposure that are triggered for purposes of coverage.
The insured, Radiator Specialty Company (“RSC”), is a North Carolina-based manufacturer of automotive, hardware, and plumbing products, including cleaners, degreasers, and lubricants. Some of the products RSC manufactured contained benzene. Over the past 20 years, RSC has been named in hundreds of personal injury lawsuits seeking damages for bodily injury (e.g., cancer and death) allegedly caused by repeated exposure to benzene. RSC purchased more than 100 standard-form product liability policies from 25 insurers over the 20 years it manufactured benzene-containing products. RSC sued its insurers seeking coverage for liability it incurred as a result of the benzene litigation.
Specifically at issue in Radiator Specialty was when each insurers’ coverage is triggered in these circumstances—that is, whether coverage is triggered when a claimant is exposed to benzene, or instead, when the claimant develops observable bodily injury, such as sickness or disease (“manifestation”). The policies issued by the defendants:
- Were CGL policies in which the insurers agreed to pay “all sums which the insured shall become legally obligated to pay as damages because of bodily injury…caused by an occurrence.”
- Generally defined “bodily injury” as injury, sickness, or disease sustained by a person, and “occurrence” as an accident, including exposure.
The court was tasked with determining the point at which various benzene claimants experienced bodily injury such that RSC’s coverage under the policies was activated.
Landmark American Insurance Company (“Landmark”) and National Union Fire Insurance Company of Pittsburgh, PA (“National Union”) argued that the activating or triggering event is a claimant’s actual exposure to benzene. In other words, coverage is triggered if, and only if, the underlying claimant was exposed to benzene during that policy’s effective dates because a claimant only experiences bodily injury during (or shortly after) the exposure to benzene.
In contrast, Fireman’s Fund Insurance Company (“Fireman’s Fund”) and RSC argued that the policies do not provide coverage until there is a cognizable injury—meaning the policy’s coverage is triggered when a claimant suffers bodily injury, sickness, disease or death during the policy period. Additionally, Fireman’s Fund also argued that the exposure continues to cause injury long after the initial exposure, which could extend an insurer’s potential coverage obligations after the effective period of its policy (“continuous”).
The court began by noting that the unambiguous language of each of the relevant policies requires the insurers to indemnify RSC for claims raised by claimants who suffered some form of personal or bodily injury caused by an occurrence, and specifies that either the occurrence or the resulting injury must take place during the effective period of the insurer’s policy.
However, the court found that the policies do not define personal or bodily injury to require some diagnosable sickness or disease for coverage to be triggered. In fact, the court pointed out that the term “personal injury” in one of the defendant’s policies includes a “bodily injury,” such as that caused by “exposure.”
Accordingly, the court rebuked RSC’s attempt to redefine injury-in-fact as death, disease, or some other physical manifestation as “confusing the injury with its consequences.” For example, the court explained that a disease such as cancer is a manifestation of the injury that occurs upon benzene exposure that creates a compensable claim—it is not the injury itself.
The court, agreeing with Landmark and National Union, held that benzene causes bodily injury upon exposure.
The court also rejected the application of a continuous trigger theory. While the insurers acknowledged that other courts have applied a continuous trigger theory in the context of asbestos claims, they argued that benzene is different than asbestos because unlike benzene, asbestos stays in the body permanently and may continue to cause new injuries after exposure. In contrast, the insurers presented evidence at trial that demonstrated that benzene causes injury only during the time periods in which a claimant is exposed to it and then it is flushed from the body within hours or days. Therefore, the court held that application of a continuous trigger is inappropriate because the injury occurs at the time of exposure, and does not continue to cause new injuries after exposure.
In addition to the issue of the appropriate coverage trigger, the court also addressed the proper allocation scheme and whether vertical or horizontal exhaustion applied to the duty to defend under certain umbrella policies.
With respect to the allocation issue, the court reversed the Court of Appeals holding that the policy language supported an all sums approach.
Instead, the court found that the policy language required a pro-rata allocation. Referencing several extra-jurisdictional decisions, the court determined that the modern trend is to apply pro-rata allocation when limiting language like “during the policy period” exists, even when the policy language contains a reference to paying all sums arising out of certain liabilities.
With respect to exhaustion, RSC argued that its policies with the excess and umbrella insurers contained a duty to defend against lawsuits, claims, proceedings, etc. related to various forms of injury.
The court noted that the trial court adopted a mixed approach, applying horizontal exhaustion to the insurers’ duty to defend but vertical exhaustion to the duty to indemnify. However, the court found that vertical exhaustion applied to the duty to defend under certain umbrella policies because the language of certain underlying policies precluded coverage for benzene claims—meaning there was no valid and collectible insurance other than the excess policies.
Radiator Specialty is significant as it is one of the few appellate court decisions to determine the proper trigger analysis for benzene claims. It is likely that other courts will look to the court’s reasoning in Radiator Specialty if presented with similar coverage trigger issues for underlying benzene claims.
Moreover, while the opinion does not discuss the specifics of the science and medical information that was presented in the trial court, it appears that court was sufficiently satisfied with the methodology and conclusions to affirm the trial court’s application of the exposure trigger. Accordingly, Radiator Specialty may serve as an important blueprint for insurers involved in benzene-related coverage litigation going forward.
If you have any questions about this case or what it means for your insurance policies, please contact a member of our Insurance Coverage Group.
Note: In a footnote, the court indicates that medical and scientific evidence was presented at trial but that it was filed under seal. Therefore, the opinion discussed the information only in general terms.