Insurance Dispute: AIG and Century Indemnity Challenge Coverage for KFI
On April 9, 2024, AIG insurance groups Lexington Insurance and National Union Fire Insurance, along with Century Indemnity Co., contested coverage for Kidde-Fenwal Inc. (KFI) in lawsuits regarding harmful chemical exposure from firefighting foam. The insurers argue that KFI should go through arbitration to determine if a “pollution exclusion” in their contract negates coverage, while Century Indemnity claims the lawsuits fall outside their insurance period.
KFI, facing over $1 billion in claims and undergoing Chapter 11 bankruptcy, sought coverage from 30 insurers. AIG cited a pollution exclusion in their contract, prompting KFI to argue that the contract only addresses interpreting the exclusion, a matter they believe should be resolved in bankruptcy court. AIG countered that such issues are for arbitrators to decide, emphasizing the need to interpret the exclusion’s terms. Century Indemnity’s argument revolves around the foam’s manufacture date, insisting KFI hasn’t proven the foam was made before their insurance coverage ended in 1973.
