Many insurance policies contain a “non-cumulation clause” which limits the insurer’s exposure to the policy limit. The Court of Appeals previously addressed the non-cumulation clause for lead paint claims in Hiraldo v. Allstate, 5 N.Y.3d 508, 840 N.E.2d 563 (2005), where the infant plaintiff alleged lead poisoning over the course of three (3) years while living at a property owned by the insured. The insured had a landlord’s insurance policy with Allstate, and two (2) identical renewal policies, each with a $300,000 liability limit. The Court of Appeals held that the non-cumulation clause precluded the plaintiff from stacking the policies. The liability limits for plaintiff’s claims were thus $300,000.
In Nesmith v. Allstate Insurance Company, two (2) families occupied the same apartment in successive years between 1992 and 1993. Felicia Young and her children lived in the subject apartment from November 1992 until September 1993. In July 1993, the Department of Health notified the landlord that one of the Young children had been found to have elevated lead levels and violations were cited at the residence. The landlord made repairs and the Department of Health advised, in August 1993, that the violations had been corrected. After the Young family moved out in September 1993, Lorenzo Patterson, Sr. moved in with the Nesmith children. Again, a child was found to have an elevated blood level and violations were cited by the Department of Health. Thus, despite the initial efforts made by the landlord to remediate the lead hazards after the first family vacated the property, and before the second family moved into the property, lead hazards continued to exist on the property.
The Court of Appeals agreed with Defendant Allstate that there was no basis to conclude that a new lead paint hazard had been introduced between the time when the first family moved out of the residence and the second family moved in. Even though the claims were during different time frames and involved different plaintiffs, the hazard was the same. Both the Nesmith and Young plaintiffs were injured “from continuous or repeated exposure to the same general conditions” so that the injuries were a single “accidental loss” within the meaning of the policy. Thus, the insurer’s maximum total liability for the Nesmith and Young claims was the policy limit.
The significance of this decision cannot be overstated as it caps an insurer’s exposure in multiple claims to the policy limit for “each occurrence”, as long as the hazard is the same and the policy contains a non-cumulation clause.
If you have any questions on this decision or any lead paint claims, please do not hesitate to contact Renata Kowalczuk or Kristen B. Degnan.