Colorado justices say insurer not obligated to bail out asbestos manufacturer – Denver Gazette

Colorado justices say insurer not obligated to bail out asbestos manufacturer  Denver Gazette

The Colorado Supreme Court decided on Monday that an insurance policy that reaches beyond the limits and coverage of a company’s other policies is not obligated to step into the shoes of those policies after they no longer provide coverage. The case reached the Supreme Court in an unusual way after a federal judge asked the justices to interpret a key question of state law in an insurance dispute. Commerce City-based A.R. Wilfley & Sons, Inc. manufactured asbestos-containing products and, as a result, has been sued numerous times for asbestos exposure. Wilfley received primary insurance coverage to defend against those claims until they reached their payment limits or the insurers became insolvent.

Federal Insurance Company issued Wilfley an “umbrella” and excess policy that obligated it to defend the company on claims “not covered by the underlying policies.” Federal argued it was not required to act as the primary insurer under the circumstances, where Wilfley did have coverage through underlying policies that, practically speaking, were of no use. Last year, U.S. Magistrate Judge N. Reid Neureiter, who is handling Wilfley’s federal lawsuit against Federal, agreed with the insurance company. No “ordinary insured could reasonably read the Federal Umbrella Policies to mean that, in the event of the insolvency of the scheduled underlying insurers, Federal would be required to drop down and