On August 9, 2012, the California Supreme Court handed down its much anticipated decision in State of California v. Continental Ins. Co. The California Supreme Court held that the “all sums” method of allocation applies in California and that an insured can horizontally stack all successively triggered policies in an environmental property damage case involving a single occurrence causing continuous and progressive contamination throughout multiple policy years.
Therefore, a liability insurer is obligated to pay all sums the insured become obligated to pay for property damage attributable to a contaminated site up to policy limits as long as some of the continuous property damage occurred while that particular insurer’s policy was on the loss. An insurer cannot limit its liability to just the amount of loss that occurred during its particular policy period. The Supreme Court also concluded that absent specific “anti-stacking” policy language, an insured is entitled to “stack” the consecutive policy limits of each successively triggered policy to recover the limits of all policies on the risk for the loss.