The Hawaii Supreme Court ruled that AIG units do not have to defend Sunoco LP’s subsidiary against lawsuits related to climate change risks from fossil fuels, stating that greenhouse gases are considered pollutants under their policies’ exclusions.
The Hawaii Supreme Court has ruled that certain units of American International Group Inc. (AIG) are not required to defend a subsidiary of Sunoco LP against lawsuits asserting that it misrepresented climate change risks associated with fossil fuel combustion. This conclusion was reached based on the court’s determination that greenhouse gases fall under a pollution exclusion clause in the AIG policies, thus exempting the insurers from any obligations to provide legal defense. The ruling stemmed from a case entitled Aloha Petroleum Ltd. v. National Union Fire Insurance Co. of Pittsburgh, Pennsylvania, where two Hawaiian counties had filed suit against Aloha, claiming that the company was aware since the 1960s of the potential climate change risks caused by fossil fuels. The counties further alleged that they had incurred property damage attributable to climate change and faced increased expenses for mitigating severe weather-related incidents. Insurers contended that Aloha had intentionally misrepresented information about fossil fuels, thereby falling outside their coverage responsibilities due to the applicable pollution exclusions. Representatives from both sides did not respond to inquiries for comments regarding this ruling.
This Supreme Court ruling is significant in the context of ongoing legal debates concerning the responsibilities of corporations in relation to climate change. The lawsuits filed by Honolulu and Maui counties aim at holding fossil fuel companies accountable for their contributions to climate change, arguing that these companies have historically failed to disclose the detrimental environmental impacts of their products. This case is part of a broader trend where local governments are seeking legal recourse against major oil and gas producers, attempting to recover costs linked to climate-related damages. The determination regarding pollution exclusions is pivotal as it clarifies the liability of insurers when faced with claims related to environmental harm, an increasingly relevant legal topic as climate change litigation grows.
In conclusion, the Hawaii Supreme Court’s decision highlights the complex interplay between environmental accountability and insurance obligations in the face of climate change lawsuits. By concluding that greenhouse gases qualify as pollutants, the court has affirmed the validity of pollution exclusion clauses within insurance policies, thereby relieving AIG units from the duty to defend Aloha Petroleum against such suits. This ruling may set a crucial precedent for similar cases involving fossil fuel companies and their insurers.
Original Source: www.businessinsurance.com
