This guest post comes from Nina Tandon, a recent graduate of Boston University School of Law and the Fletcher School who is currently a legal fellow in ERI’s office in Washington, DC.
Legal liability for climate change impacts, long a goal of environmental activists, is inching its way onto the radar screen for important players in our world economy – insurance companies and, perhaps, even nation-states.
Who should pay in climate change lawsuits - the corporations or their insurance?
Earlier this month, the Virginia Supreme Court handed down a decision that freed insurance companies from the responsibility for paying their insured clients for climate change-related damage, particularly when the gas emissions are foreseen consequences of the insured’s intentional acts. In plain English, what this means is that companies that emit greenhouse gases in the regular course of their operations (like electric companies) won’t be able to collect from their insurance companies in the event that they are sued for damage caused by the gas emissions.
The case, AES Corp. v. Steadfast Ins. Co., considered whether the Steadfast Insurance Company is responsible for defending its client, AES, against lawsuits related to AES’s greenhouse gas emissions. In a separate and ongoing case, citizens of Kivalina, Alaska, have sued AES, an electric company, over the harmful environmental effects of AES’ emissions of carbon dioxide and other greenhouse gases. The court held that because the greenhouse gas emissions were a “natural and probable consequence” of AES’ intentional acts, the emissions did not qualify as an “accident” that would be covered under the terms of the insurance agreement between AES and Steadfast. In other words, AES has to defend and pay any damages itself.
Although the state supreme court’s decision isn’t binding on the courts of other states and does not . . .