The Hawaii Supreme Court has determined that AIG subsidiaries do not need to defend Sunoco LP against lawsuits alleging misrepresentation of climate change risks associated with fossil fuels. The court ruled that greenhouse gases are pollutants falling under policy exclusions, while also acknowledging Aloha’s reckless conduct as a trigger for the insurers’ defense obligations. The counties have argued they experienced property damage due to climate change, and Aloha is seeking insurance defense for these claims.
The Hawaii Supreme Court has ruled that specific subsidiaries of American International Group Inc. (AIG) are not required to defend a Sunoco LP entity in two lawsuits alleging the misrepresentation of climate change risks tied to fossil fuel consumption. In response to certified inquiries from a federal judge in Hawaii, the court concluded that greenhouse gases are classified as pollutants, which fall under an exclusion within the AIG-issued policies. This decision highlighted that such gases “spoil our planet’s climate system, destabilizing it for present and future generations.” The relevant case is identified as Aloha Petroleum Ltd. v. National Union Fire Insurance Co. of Pittsburgh, Pa. et al. Additionally, the court noted that Aloha’s alleged reckless conduct regarding fossil fuel marketing invoked the insurers’ obligation to provide a defense. Aloha Petroleum initiated legal action against National Union Fire Insurance and American Home Assurance Co. in an effort to compel them to defend against lawsuits filed by Honolulu and Maui counties. These counties contend that oil companies were aware as early as the 1960s of the detrimental effects of fossil fuel combustion contributing to climate change. According to the counties, they have incurred property damage attributed to climate change and are facing escalated expenses associated with preparing for and addressing severe weather phenomena. In their defense, the AIG subsidiaries argued that Aloha’s intentional marketing actions exempt them from any obligation to provide defense, pursuant to the pollution exclusions established in their insurance policies. Representatives from the involved parties have not yet provided responses to requests for comment.
The ruling from the Hawaii Supreme Court underscores a critical intersection of environmental law, insurance liability, and corporate accountability within the context of climate change litigation. This case reflects ongoing legal disputes in which municipalities across the United States are seeking redress from fossil fuel companies, citing long-term damages attributed to climate change. The litigation often revolves around whether such companies knowingly engaged in practices that contributed to environmental degradation, and whether their insurers bear responsibility to defend against related claims. The decision illuminates the complexities surrounding insurance coverage and the interpretation of policy exclusions, specifically related to pollution liabilities.
In summary, the Hawaii Supreme Court’s ruling delineates the boundaries of insurance defense obligations concerning climate change lawsuits against fossil fuel companies. By categorizing greenhouse gases as pollutants that invoke policy exclusions, the court effectively relieves AIG units from defending a Sunoco subsidiary against allegations of misrepresentation regarding climate risks. This case exemplifies the mounting legal pressure on fossil fuel entities and their insurers as the implications of climate change continue to manifest and prompt litigation from affected jurisdictions.
Original Source: www.businessinsurance.com
