The federal Third Circuit Court of Appeals has enforced a Travelers asbestos exclusion, finding it to be unambiguous. In General Refractories Co. v. First State Ins. Co., the court analyzed language that read: “It is agreed that this policy does not apply to [loss] arising out of asbestos…” General Refractories (GRC) contended that the exclusion did not bar coverage for numerous bodily injury lawsuits filed against it by people alleging exposure to asbestos-containing products manufactured by GRC. The lower court agreed with the company that the exclusion applies only to losses related to raw asbestos. The appellate court reversed, saying that it was not necessary to determine whether the word “asbestos” in the exclusion was or was not confined to raw asbestos. The court focused instead on the phrase “arising out of asbestos,” saying that the exclusion applied because “the claims [against GRC] stem from exposure to the asbestos incorporated into the finished products that GRC manufactured or sold.” According to the court, “Pennsylvania courts have long construed the phrase ‘arising out of’—when used in the context of an insurance exclusion—to ‘[m]ean causally connected with, not proximately caused by.’ ” The court concluded that “the provision plainly encompasses losses that would not have occurred but for asbestos or which are causally connected to asbestos. Pennsylvania law permits no other interpretation.”
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