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Virginia Supreme Court Holds No Insurance Coverage for Claimed Damages Contributing to Climate Change

Last week the Virginia Supreme Court upheld a lower court ruling that an insurance carrier had no liability to cover its insured in an action claiming the insured’s activities had contributed to damages resulting from the effects of climate change. In AES Corporation v Steadfast Insurance Co., the Virginia Supreme Court noted that the action resulted from a lawsuit by a Native Alaskan Village against several companies, including AES, claiming they damaged “the village by causing global warming through emission of greenhouse gases”.

In holding that the insurance policy did not provide coverage for the claims made against AES, the Court found:

“Under the CGL policies, Steadfast would not be liable because AES’s acts as alleged in the complaint were intentional and the consequences of those acts are alleged by Kivalina to be not merely foreseeable, but natural or probable. Where the harmful consequences of an act are alleged to have been not just possible, but the natural or probable consequences of an intentional act, choosing to perform the act deliberately, even if in ignorance of that fact, does not make the resulting injury an “accident” even when the complaint alleges that such action was negligent.

Kivalina asserts that the deleterious results of emitting carbon dioxide and greenhouse gases are something that AES knew or should have known about. If an insured knew or should have known that certain results were the natural or probable consequences of intentional acts or omissions, there is no “occurrence” within the meaning of a CGL policy.”

As more similar actions are likely in various jurisdictions, it will be interesting to see how the case law in this area develops.

-Steven Silverberg