Opinion ID: 2352039
Heading Depth: 1
Heading Rank: 5

Heading: Fair expectations of the parties

Text: One of the dominant themes of insurance law is that the outcome should fulfill the fair expectations of the parties. We have recognized, however, in this context of commercial CGL coverage, that the parties to the contracts are on a much more level playing field and that contract-of-adhesion principles are not as fully applicable as in other circumstances. Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437, 471, 650 A. 2d 974 (1994). We may safely assume that policyholders generally expect that a careful investigation of their potential liability will be provided by their insurance company pursuant to its duty to defend against any claims. Likewise, most insurance companies expect that they will incur these expenses. That the government orders a policyholder to perform remedial investigations does not change the character of the work or the initial expectations of the parties. The more difficult question is whether a policyholder could fairly expect that an insurance company would bear limitless liability to perform remedial investigations when those investigations were incidental to a mandated environmental cleanup. Or, put differently, the question is whether an insurance company that had issued a policy with limits of $100,000 would expect to undertake a remedial study that might cost millions of dollars.