In the case of Viking Pump Inc. et al. v. Century Indemnity Co. et al., case number 10C-06-141 FSS CCLD, Superior Court of the State of Delaware, County of New Castle. In the case, Warren and Viking pursued tens of millions of dollars in insurance coverage from 35 excess insurers. The question for the court was whether all policies in a single layer had to be exhausted before the next level of insurance began to provide coverage. The Delaware appellate court ruled that, as a matter of first impression for New York, the answer was “no” and the horizontal exhaustion method (which requires all policies in a single layer to be exhausted before the next level begins to provide coverage) only applies to primary and umbrella policies. In reaching this decision, the court applied California precedent and effectively ruled that the policyholders’ reasonable expectations would be thwarted if a carrier was allowed to disclaim coverage because the underlying policies had not all paid their limits.

Stay tuned for more on this story as we’re certain that appeals will continue. But pay close attention to the reality that in mass tort claims, insurers are likely to hear a lot about Viking Pump.

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