In a case that has drawn significant attention from the insurance industry, the Virginia Supreme Court has ruled that Steadfast Insurance is not required to defend AES Corp., which is a defendant in Kivalina v. Exxon Mobil Corp, et al, a significant climate change case that is currently before the 9th Circuit Court of Appeals in San Francisco.
Lawyers are expecting that over the next few years, there will be a rise in litigation for insurance coverage cases that are connected to climate change, making this case an important one for establishing the look of the legal landscape.
In 2008, when AES faced the lawsuit from Kivalina, it looked to Steadfast for defense against claims that were made, stating that emissions from AES were contributing to the rising levels of the seawater and that this was endangering the Kivalina village. Instead of defending AES, Steadfast requested that a judge in Arlington County, Va., determine whether or not it was its duty to defend the company.
The ruling of the judge was that Steadfast was not duty-bound to defend AES, in part because no “accident” or “occurrence” had set the coverage in motion which would require the insurer to defend.
AES stated that there was a duty for Steadfast to defend them because Kivalina’s plaintiffs were accusing the company of negligence. The brief from AES stated that “Steadfast’s policies broadly obligate it to indemnify AES for property damage claims involving ‘accidents’.”
That argument was rejected by the Virginia Supreme Court in its AES v. Steadfast case ruling. Justice Bernard Goodwyn explained that the insurance policy terms in question do not provide coverage for the acts relating to climate change which are the foundation of the Kivalina case.