A New York appeals court cut more than $6.5 million from an insurer's asbestos-coverage bill, finding policyholders missed a deadline in their policies.
The Appellate Division, Fourth Department, ruled on July 24, 2026, in a long-running dispute between two manufacturers and their excess liability insurer over who should pay for a string of underlying asbestos lawsuits.
Carrier Corporation and Elliott Company had sued Fireman's Fund Insurance Company for breach of contract, saying it failed to cover defense costs and indemnity amounts under certain excess liability policies. The case moved through the trial court in two stages. An earlier judgment awarded the manufacturers damages tied to payments made through the end of 2016. A later final judgment folded in that earlier award and added damages for payments made after December 31, 2016, plus prejudgment interest.
Fireman's Fund appealed both. The court dismissed the appeal from the earlier judgment, since a final judgment had already been entered, and focused on the final one. A unanimous panel rejected most of the insurer's arguments but agreed on the one with the biggest price tag.
It found the insurer should not owe $6,585,472 for payments the manufacturers made from August 18, 2014, through December 31, 2016. The policies required the policyholders to make a "definite claim" for coverage within 12 months of a payment. They did not. Because that step was a condition precedent - a box that had to be checked before the insurer had to pay - the court vacated that award for claims accruing before 2017.
On the other issues, the manufacturers held their ground. Fireman's Fund argued that subclinical injuries - those that have not yet shown obvious symptoms - should not count as real injury for coverage. The court found no basis to disturb the lower court's determination that they were injury-in-fact. The insurer also argued that defense costs on later-dismissed claims should not erode the underlying policy limits. The court rejected that too. It reviewed the insurer's remaining arguments and found none justified further changes to the judgment.
For claims teams, the lesson is timing. A solid coverage position can still collapse over a missed notice or claim step written into the policy. Excess carriers in particular will note how erosion disputes and claim-timing conditions can swing seven-figure sums either way. Here, one condition wiped out more than $6.5 million.
The decision remains uncorrected and subject to revision before it appears in the Official Reports.
