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Jones v. Liberty Mut. Ins. Co.

ELR Citation: 34 ELR 20113
Nos. Nos. 02-2389, -2427, (4th Cir., 10/06/2004)

The Fourth Circuit held that under Maryland law, insurers of a bankrupt insulation company are liable only for a pro rata portion of the bodily injury that occurred during the time the company's policy was in place and that any injuries that occurred after the company completed its asbestos installation work were subject to the aggregate limits of the policies. Steel plant employees who were injured by asbestos during the company's insulation work at the plant intervened in a bankruptcy case establishing various insurers' liability. Under the bankruptcy plan, proceeds from the company's insurance policies would be used to fund a trust to handle asbestos claims against the company; the amount each insurer is required to contribute depends on the interpretation of the policies. The district court properly applied Maryland law and adopted the pro rata theory for allocating liability. Under this theory, the insurers are liable only for a pro rata portion of the bodily injury that occurred during the time each insurer's policy was in place. For any bodily injury occurring during a time when the company was self-insured or when the company's policy contained an exclusion, the company would bear the risk of liability. In addition, any injuries that occurred after the company completed its installation work with asbestos were subject to the aggregate limits of the policies under the "completed operations" hazard clauses in the policies. Policies issued to the company for time periods in which the company was installing asbestos will not be subject to the aggregate limit of liability. In addition, the employees waived their argument that their injuries came from "abandoned or unused materials" because it was not raised below.