Court Finds That $400 Million Paid Into Abatement Fund Qualifies as “Damages” Under the Insured’s Policies

Gavel

Sherwin-Williams highlights how insurers may try to narrow the meaning of undefined terms in their insurance policies.

November 21, 2022
Lorelie S. Masters & Yaniel Abreu - Hunton Insurance Recovery Blog

In Sherwin-Williams Co. v. Certain Underwriters at Lloyd’s London, et al., the Court of Appeals for Ohio’s Eighth District reversed the lower court, finding that money paid by the insured into an abatement fund was “damages” as that undefined term was used in the policyholder’s insurance policies. 2022-Ohio-3031, ¶ 1. Sherwin-Williams is a cautionary tale about how insurers may try to narrow the meaning of undefined terms in their insurance policies.

The dispute in Sherwin-Williams focused on coverage for $400 million that the policyholder and other defendants were ordered to pay into an abatement fund to be used by California cities and counties to mitigate the hazards caused by lead paint in homes. Id. ¶ 1. Although the underlying litigation proceeded in California, Ohio law governed coverage, which raised issues of first impression in Ohio. Id. Among other things, the insurers argued that the money paid into the abatement fund did not qualify as “damages” under the policies. Id. ¶ 57. The insured argued that, because the insurers did not define “damages” in the policies, the term had to be given its ordinary meaning. Id. ¶ 56.

Reprinted courtesy of Lorelie S. Masters, Hunton Andrews Kurth and Yaniel Abreu, Hunton Andrews Kurth

Ms. Masters may be contacted at lmasters@HuntonAK.com
Mr. Abreu may be contacted at yabreu@HuntonAK.com



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