Truck Ins. Exchange v. Kaiser Cement & Gypsum Corp.

Opinion of the Court by Groban, J.

This appeal requires us to decide when a first-level excess insurer’s indemnity obligations attach in the context of a continuous injury that triggers multiple policy periods. In Montrose Chemical Corp. of California v. Superior Court (2020) 9 Cal.5th 215 (Montrose III),1 we addressed the sequence in which an insured could access its excess insurance policies for continuous environmental damage that had occurred over two decades. The insured sought a rule of “vertical exhaustion,” which would allow it to access an excess insurance policy as soon as all the directly underlying insurance from that policy period (i.e., any primary and any excess policies with a lower attachment point) were exhausted. (See id. at p. 225.) The insurer sought a rule of “horizontal exhaustion,” which would not allow the insured to access an excess policy until it had exhausted every excess policy with a lower attachment point across all relevant policy periods. (See ibid.) The parties to Montrose III did not dispute that all primary policies had been exhausted. Thus, the only issue before us was whether, upon exhaustion of all primary policies, the availability of…