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Berkshire Hathaway unit must cover Montana Superfund site

Berkshire Hathaway unit must cover Montana Superfund site

A Berkshire Hathaway Inc. unit is obligated to provide coverage to the state of Montana for asbestos claims under a comprehensive general liability policy it issued for a mine for 1973 through 1975, says a Montana state court.

A $43 million settlement was reached in the case in 2009, although there have been almost 900 more claimants since then in connection with the Libby, Montana, mine.

The state of Montana knew about hazardous conditions, injuries and deaths from the mine, which later became a Superfund site, since 1942, according to the ruling by the Montana state court in Bozeman in National Indemnity Co. v. State of Montana, Terry Jellesed, et. al. The ruling, filed March 1, was first publicized last week.

The state invited private insurers to submit bids to provide insurance coverage for the mine in 1973, which led to the coverage by Berkshire unit Omaha, Nebraska-based National Indemnity.

The state has self-insured its liability under a comprehensive self-insurance program since July 1976, according to the ruling. Individuals began filing claims against the state for alleged injuries from asbestos exposure at the Libby mine beginning in 2000, the ruling said.

The state disclosed its knowledge of the mine’s hazardous asbestos conditions to the insurer in 2002, or 29 years after the National Indemnity policy, which included a pollution exclusion, was underwritten, according to the ruling.

In 2009, National Indemnity agreed, subject to a reservation of rights, to advance $16.1 million toward the $43 million settlement that was reached, based on its valuation of $13.1 million and the state’s representation that it had incurred $3 million in defense costs.

The insurer filed suit in state court in 2012, seeking a declaratory judgment in the case and the state filed a counterclaim. As of September 2015, the state notified National Indemnity of more than 860 claimants that were not included in the $43 million settlement, said the ruling.

Both sides moved for summary judgment in the case, which the judge granted the state. National Indemnity breached its duty to defend the state by indicating in a 2005 letter “that it would only pay defense costs, and any losses in which the policy applied on a pro rata basis,” said the ruling.

“An insurer who breaches its duty to defend is estopped from denying coverage for amounts paid by the insured in settlements or judgments,” said the ruling.

“Having determined that National breached its duty to defend the state as of July 18, 2005, National is responsible for paying all defense costs incurred by the state subsequent to that date,” the ruling said.

“National also is responsible for paying the amounts in the Libby claims for which National has not provided a full defense as of the date each settlement was approved by the district court presiding over that case, irrespective of policy limits.”

A Berkshire Hathaway spokesperson could not be reached for comment.




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