High Court Says Policyholder Is Entitled To Coverage

State Of California v. Allstate Insurance Company

On March 9, 2009, the Supreme Court of California held that a policyholder is entitled to coverage for environmental damage that results from a combination of covered and excluded causes. In State of California v. Allstate Insurance Company, 09 C.D.O.S. 2890, the high court issued one of its most important insurance coverage decisions in recent years. "The insured's inability to allocate the damages by cause does not excuse the insurer from its duty to indemnify," the court explained.

This decision will likely influence the outcome of insurance disputes around the country in which the policyholder is unable to quantify the extent to which an excluded cause might have contributed to the damage for which it seeks coverage. Such disputes are central to many first-party property claims such as hurricane claims, which often involve a combination of covered wind damage and excluded flood damage, and third-party liability