Chapter 799 Oregon Laws 2003

AN ACT

SB 297

Relating to contracts; creating new provisions; and amending ORS 465.475 and 465.480.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 465.475 is amended to read:

465.475. For the purposes of ORS 465.475 to 465.480 [and section 5, chapter 783, Oregon Laws 1999]:

(1) “Environmental claim” means a claim for defense or indemnity submitted under a general liability insurance policy by an insured facing, or allegedly facing, potential liability for bodily injury or property damage arising from a release of pollutants onto or into land, air or water.

(2) “General liability insurance policy” means any contract of insurance that provides coverage for the obligations at law or in equity of an insured for bodily injury, property damage or personal injury to others. “General liability insurance policy” includes but is not limited to a pollution liability insurance policy, a commercial general liability insurance policy, a comprehensive general liability policy, an excess liability policy, an umbrella liability insurance policy or any other kind of policy covering the liability of an insured for the claims of third parties. “General liability insurance policy” does not include homeowner or motor vehicle policies or portions of other policies relating to homeowner or motor vehicle coverages, claims-made policies or portions of other policies relating to claims-made policies or specialty line liability coverage such as directors and officers insurance, errors and omissions insurance or other similar policies.

(3) “Insured” means any person included as a named insured on a general liability insurance policy who has or had a property interest in a site in Oregon that involves an environmental claim.

(4) “Lost policy” means any part or all of a general liability insurance policy that is alleged to be ruined, destroyed, misplaced or otherwise no longer possessed by the insured.

(5) “Policy” means the written contract or agreement, and all clauses, riders, endorsements and papers that are a part of the contract or agreement, for or effecting insurance.

SECTION 2. ORS 465.480 is amended to read:

465.480. (1) As used in this section[,]:

(a) “Suit” or “lawsuit” includes but is not limited to formal judicial proceedings, administrative proceedings and actions taken under Oregon or federal law, including actions taken under administrative oversight of the Department of Environmental Quality or the United States Environmental Protection Agency pursuant to written voluntary agreements, consent decrees and consent orders.

(b) “Uninsured” means an insured who, for any period of time after January 1, 1971, that is included in an environmental claim, failed to purchase and maintain an occurrence-based general liability insurance policy that would have provided coverage for the environmental claim, provided that such insurance was commercially available at such time. A general liability insurance policy is “commercially available” if the policy can be purchased under the Insurance Code on reasonable commercial terms.

(2) Except as provided in subsection [(3)] (7) of this section, in any action between an insured and an insurer to determine the existence of coverage for the costs of investigating and remediating environmental contamination, whether in response to governmental demand or pursuant to a written voluntary agreement, consent decree or consent order, including the existence of coverage for the costs of defending a suit against the insured for such costs, the following rules of construction shall apply in the interpretation of general liability insurance policies involving environmental claims:

(a) Oregon law shall be applied in all cases where the contaminated property to which the action relates is located within the State of Oregon. Nothing in this section shall be interpreted to modify common law rules governing choice of law determinations for sites located outside the State of Oregon.

(b) Any action or agreement by the Department of Environmental Quality or the United States Environmental Protection Agency against or with an insured in which the Department of Environmental Quality or the United States Environmental Protection Agency in writing directs, requests or agrees that an insured take action with respect to contamination within the State of Oregon is equivalent to a suit or lawsuit as those terms are used in any general liability insurance policy.

(c) Insurance coverage for any reasonable and necessary fees, costs and expenses, including remedial investigations, feasibility study costs and expenses, incurred by the insured pursuant to a written voluntary agreement, consent decree or consent order between the insured and either the Department of Environmental Quality or the United States Environmental Protection Agency, when incurred as a result of a written direction, request or agreement by the Department of Environmental Quality or the United States Environmental Protection Agency to take action with respect to contamination within the State of Oregon, shall not be denied the insured on the ground that such expenses constitute voluntary payments by the insured.

(3)(a) An insurer with a duty to pay defense or indemnity costs, or both, to an insured for an environmental claim under a general liability insurance policy that provides that the insurer has a duty to pay all sums arising out of a risk covered by the policy, must pay all defense or indemnity costs, or both, proximately arising out of the risk pursuant to the applicable terms of its policy, including its limit of liability, independent and unaffected by other insurance that may provide coverage for the same claim.

(b) If an insured who makes an environmental claim under general liability insurance policies that provide that an insurer has a duty to pay all sums arising out of a risk covered by the policy has more than one such general liability insurance policy insurer, the insured shall provide notice of the claim to all such insurers for whom the insured has current addresses. If the insured’s claim is not fully satisfied and the insured files suit on the claim against only one such insurer, the insured must choose that insurer based on the following factors:

(A) The total period of time that an insurer issued a general liability insurance policy to the insured applicable to the environmental claim;

(B) The policy limits, including any exclusions to coverage, of each of the general liability insurance policies that provide coverage or payment for the environmental claim; or

(C) The policy that provides the most appropriate type of coverage for the type of environmental claim for which the insured is liable or potentially liable.

(c) If requested by an insurer chosen by an insured under paragraph (b) of this subsection, the insured shall provide information regarding other general liability insurance policies held by the insured that would potentially provide coverage for the same environmental claim.

(d) An insurer chosen by an insured under paragraph (b) of this subsection may not be required to pay defense or indemnity costs in excess of the applicable policy limits, if any, on such defense or indemnity costs, including any exclusions to coverage.

(4) An insurer that has paid an environmental claim may seek contribution from any other insurer that is liable or potentially liable. If a court determines that the apportionment of recoverable costs between insurers is appropriate, the court shall allocate the covered damages between the insurers before the court, based on the following factors:

(a) The total period of time that each solvent insurer issued a general liability insurance policy to the insured applicable to the environmental claim;

(b) The policy limits, including any exclusions to coverage, of each of the general liability insurance policies that provide coverage or payment for the environmental claim for which the insured is liable or potentially liable;

(c) The policy that provides the most appropriate type of coverage for the type of environmental claim; and

(d) If the insured is an uninsured for any part of the time period included in the environmental claim, the insured shall be considered an insurer for purposes of allocation.

(5) If an insured is an uninsured for any part of the time period included in the environmental claim, an insurer who otherwise has an obligation to pay defense costs may deny that portion of defense costs that would be allocated to the insured under subsection (4) of this section.

(6)(a) There is a rebuttable presumption that the costs of preliminary assessments, remedial investigations, risk assessments or other necessary investigation, as those terms are defined by rule by the Department of Environmental Quality, are defense costs payable by the insurer, subject to the provisions of the applicable general liability insurance policy or policies.

(b) There is a rebuttable presumption that payment of the costs of removal actions or feasibility studies, as those terms are defined by rule by the Department of Environmental Quality, are indemnity costs and reduce the insurer’s applicable limit of liability on the insurer’s indemnity obligations, subject to the provisions of the applicable general liability insurance policy or policies.

[(3)] (7) The rules of construction set forth in [subsection (2) of] this section [shall] do not apply if the application of the rule results in an interpretation contrary to the intent of the parties to the general liability insurance policy.

SECTION 3. Section 4 of this 2003 Act is added to and made a part of ORS 465.475 to 465.480.

SECTION 4. (1) If, after a diligent investigation by an insured of the insured’s own records, including computer records and the records of past and present agents of the insured, the insured is unable to reconstruct a lost policy, the insured may provide a notice of a lost policy to an insurer.

(2) An insurer must investigate thoroughly and promptly a notice of a lost policy. An insurer fails to investigate thoroughly and promptly if the insurer fails to provide all facts known or discovered during an investigation concerning the issuance and terms of a policy, including copies of documents establishing the issuance and terms of a policy, to the insured claiming coverage under a lost policy.

(3) An insurer and an insured must comply with the following minimum standards for facilitating reconstruction of a lost policy and determining the terms of a lost policy as provided in this section:

(a) Within 30 business days after receipt by the insurer of notice of a lost policy, the insurer shall commence an investigation into the insurer’s records, including computer records, to determine whether the insurer issued the lost policy. If the insurer determines that it issued the policy, the insurer shall commence an investigation into the terms and conditions relevant to any environmental claim made under the policy.

(b) The insurer and the insured shall cooperate with each other in determining the terms of a lost policy. The insurer and the insured:

(A) Shall provide to each other the facts known or discovered during an investigation, including the identity of any witnesses with knowledge of facts related to the issuance or existence of a lost policy.

(B) Shall provide each other with copies of documents establishing facts related to the lost policy.

(C) Are not required to produce material subject to a legal privilege or confidential claims documents provided to the insurer by another policyholder.

(c) If the insurer or the insured discovers information tending to show the existence of an insurance policy applicable to the claim, the insurer or the insured shall provide an accurate copy of the terms of the policy or a reconstruction of the policy, upon the request of the insurer or the insured.

(d) If the insurer is not able to locate portions of the policy or determine its terms, conditions or exclusions, the insurer shall provide copies of all insurance policy forms issued by the insurer during the applicable policy period that are potentially applicable to the environmental claim. The insurer shall state which of the potentially applicable forms, if any, is most likely to have been issued by the insurer, or the insurer shall state why it is unable to identify the forms after a good faith search.

(4) Following the minimum standards established in this section does not create a presumption of coverage for an environmental claim once the lost policy has been reconstructed.

(5) Following the minimum standards established in this section does not constitute:

(a) An admission by an insurer that a policy was issued or effective; or

(b) An affirmation that if the policy was issued, it was necessarily in the form produced, unless so stated by the insurer.

(6) If, based on the information discovered in an investigation of a lost policy, the insured can show by a preponderance of the evidence that a general liability insurance policy was issued to the insured by the insurer, then if:

(a) The insured cannot produce evidence that tends to show the policy limits applicable to the policy, it shall be assumed that the minimum limits of coverage, including any exclusions to coverage, offered by the insurer during the period in question were purchased by the insured.

(b) The insured can produce evidence that tends to show the policy limits applicable to the policy, then the insurer has the burden of proof to show that a different policy limit, including any exclusions to coverage, should apply.

(7) An insurer may claim an affirmative defense to a claim that the insurer failed to follow the minimum standards established under this section if the insured fails to cooperate with the insurer in the reconstruction of a lost policy under this section.

(8) The Director of the Department of Consumer and Business Services shall enforce this section and any rules adopted by the director to implement this section.

(9) Violation by an insurer of any provision of this section or any rule adopted under this section is an unfair claim settlement practice under ORS 746.230.

(10) As used in this section, “notice of a lost policy” means written notice of the lost policy in sufficient detail to identify the person or entity claiming coverage, including information concerning the name of the alleged policyholder, if known, and material facts concerning the lost policy known to the alleged policyholder.

SECTION 5. (1) Except as provided in subsections (2), (3) and (4) of this section, section 4 of this 2003 Act and the amendments to ORS 465.475 and 465.480 by sections 1 and 2 of this 2003 Act apply to all claims, whether arising before, on or after the effective date of this 2003 Act.

(2) Section 4 of this 2003 Act and the amendments to ORS 465.475 and 465.480 by sections 1 and 2 of this 2003 Act do not apply to any claim for which a final judgment, after exhaustion of all appeals, was entered before the effective date of this 2003 Act.

(3) Nothing in section 4 of this 2003 Act or the amendments to ORS 465.475 and 465.480 by sections 1 and 2 of this 2003 Act may be construed to require the retrying of any finding of fact made by a jury in a trial of an action based on an environmental claim that was conducted before the effective date of this 2003 Act.

(4) Notwithstanding any other provision of law, an insurer that is a party to an action based on an environmental claim for which a final judgment as to all insurers has not been entered by the trial court on or before the effective date of this 2003 Act and in which a binding settlement has been reached on or before the effective date of this 2003 Act between the insured and at least one insurer that was a party to the action may not seek or obtain contribution from or allocation to:

(a) The insured; or

(b) Any other insurer that prior to the effective date of this 2003 Act reached a binding settlement with the insured as to the environmental claim.

Approved by the Governor September 24, 2003

Filed in the office of Secretary of State September 24, 2003

Effective date January 1, 2004

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