Delaware Supreme Court Endorses Single State Choice of Law for Environmental Insurance Coverage Case
March 27, 2017

The Delaware Supreme Court has endorsed the application of a single state’s insurance law to disputes over coverage under policies issued to a global company for costs associated with environmental waste sites in two states. The Court reversed the lower court which had decided to apply instead the law of the state in which a given site was located. The Court stressed that although the states with the sites had an interest in their cleanup, the cleanup will occur regardless. This matter, said the Court, is a contract dispute over who will pay for the costs of cleanup. Thus, in the context of contracts, according to the Court, the law that should control is from the state (New York in this case) with the “most significant relationship among the parties” for the subject insurance policies. The Court noted that the policyholder’s predecessors had their principal place of business in New York at the time the policies were written and that there were “a number of contacts with New York over time after the beginning of the coverage.” The Court strongly preferred there be a consistent interpretation of the policies under a single state’s law for a “comprehensive, nationwide insurance program” of the type this policyholder purchased. This outcome is better, said the Court, than “the policy being read in fundamentally different ways in different cases, based on the happenstance of where, across a broad variety of possible locations and jurisdictions, potential liability results in litigation.”


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