3M Must Engage in a “Pointless Formality” to Satisfy Retention: The Importance of Avoiding Non-Market Language in CGL Policies

Today on “Don’t Take No for an Answer,” Eric Jesse and Alexander B. Corson discuss Aearo Technologies v. ACE American, in which a Delaware court held 3M could not credit $372 million it paid in defense costs against self-insured retentions in legacy CGL policies issued to its subsidiary, Aero Technologies, before its aquisition. The hosts discuss the implications of non-market language included in those policies – which specified that the self-insured retention could not be satisfied by payments made on Aearo’s behalf – and steps the insured might have taken to avoid this hyper-technical coverage defense that seemingly ignored the reality of corporate structuring and would have required 3M to engage in the “pointless formality” of transferring money to an Aearo bank account in order to satisfy its self-insured retentions.

Speakers:

Eric Jesse, Partner, Insurance Recovery
Alexander B. Corson, Associate, Insurance Recovery