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Travelers loses round in long-tailed Goodyear asbestos case

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A judge in the U.S. District Court for the Western District of Pennsylvania on Monday ruled in favor of the Goodyear Tire & Rubber Co. in a long-running dispute with Travelers Casualty and Surety Co. over asbestos liabilities.

While the ruling is related to a lawsuit filed by Goodyear in March 2013, the dispute dates back to primary liability policies Travelers issued between Jan. 1, 1971, and Jan. 1, 1977 as well as catastrophe umbrella policies issued from July 1, 1973, through July 1, 1980. Goodyear was subjected to numerous lawsuits from individuals claiming exposure to asbestos-containing products either produced by Goodyear or used at Goodyear’s premises.

The court’s ruling centered on “No Drop Down” endorsements added to the three catastrophe umbrella policies, also known as T-CUPs, that Travelers added to the Goodyear policies. Drop down clauses in umbrella policies are intended to “drop down” over reduced or exhausted underlying policy aggregate limits. The parties disagreed to what extent Travelers was required to defend or indemnify Goodyear in these lawsuits pursuant to the terms of the T-CUPs after Goodyear exhausted the underlying insurance.

While Travelers asserts that it has paid out over $84 million for asbestos products claims under primary liability policies issued to Goodyear between 1961 and 1977, Chief District Judge Joy Flowers Conti said the endorsements did not alter Travelers’ obligation to pay on the umbrella policies.

“Upon consideration of the parties’ submissions and the applicable law, the court finds, as a matter of law, that certain umbrella insurance policies were only clarified by subsequent ‘No Drop Down’ endorsements,” the ruling states. “The ‘No Drop Down’ endorsements did not modify or change any provision of the relevant umbrella policies and had no effect on Goodyear’s right under the umbrella policies to file individual claims which each encompass the covered damages of multiple individuals that arise out of a single occurrence.”

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