North Carolina Law Review

University of North Carolina School of Law

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Marching Toward a Day of Reckoning: Dissecting the Complex Intersection of Insurance Law and Climate Change Litigation Through AES Corp. v. Steadfast Ins. Co.

March 28, 2013

91 N.C. L. Rev. Addendum 95 (2013)


Thus far, AES Corp. v. Steadfast Insurance Co. is the only decision in any U.S. jurisdiction to address a claim for defense and indemnification arising out of a claim against a policyholder for damages caused by global warming. The Virginia Supreme Court held that an insurer did not owe defense or liability coverage under the terms of a commercial general liability ("CGL") insurance policy. In Steadfast, the court considered damage to an Alaskan barrier island caused by the disappearance of protective sea ice. The court found that damage making the village uninhabitable because of climate-induced ice melting was not caused by an "occurrence." Because the alleged damages stemmed from the natural and probable consequences of AES's deliberate act of emitting carbon dioxide and greenhouse gases, the injuries were not caused by an "occurrence" within the meaning of AES's CGL insurance policy, and thus the insurer did not owe a defense or liability coverage.


Justice Mims began his concurrence in AES with the ominous counsel that Virginia's insurance jurisprudence "is leading inexorably to a day of reckoning that may surprise many policy holders." This Recent Development examines the insurance issues raised in Steadfast that may lead to a "day of reckoning" for greenhouse gas emitters, who may be left to bear the costs of climate change harms on their own. 



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