These California Supreme Court decisions represent an important victory for policy holders across the state. The rapid growth of environmental regulation and litigation has had profound effects in the area of liability insurance. Insurance companies have become keenly aware of the substantial risks and costs associated with environmental contamination. Older liability policies had no specific provisions excluding environmental damages from coverage. Needless to say, insurance companies and policy holders have rarely agreed on the proper interpretation of liability policies, even with pollution exclusion clauses, in the context of an environmental claim.
Insurance companies have two primary duties under the terms of a typical liability policy.
When policy holders receive. Initial insurance disputes, therefore, are invariably concerned with the insurance, companies' duty to defend. For the insured, obtaining a defense is no trivial matter. Environmental litigation is expensive and complex. Few insureds have sufficient resources to independently fund litigation of this type.