Now Is The Time To Revisit Coverage Options

As reported in my last several columns, the recent trends in welding fume litigation have been positive. Plaintiffs have won just five verdicts in over 30 trials—and only one of those verdicts has survived appeal thus far. While dire predictions that welding fume would become the “next asbestos” appear less and less likely to come true, distributors should not be lulled into a false sense of security. In fact, now more than ever, it is imperative to review your coverage options to ensure that your business is adequately protected.

The substantial attention given to welding fume litigation over the last decade will invariably lead to more litigation. Welders—and their lawyers—will be more likely to file suit against manufacturers and distributors upon diagnosis of any disease that could possibly be linked to occupational exposure. While few plaintiffs have convinced jurors that exposure to manganese in welding fumes can cause injury, enterprising lawyers will continue to attack other components of welding fume. In fact, several suits have already alleged injury due to exposure to chromium, cadmium, fluoride and nickel in welding fumes. Several juries have returned verdicts in favor of welders injured by asbestos-coated welding rods. At the same time, the pool of potential plaintiffs has expanded. Claims are increasingly being brought by non-welders claiming incidental exposure to welding fumes, such as welder’s assistants, construction and manufacturing workers, even sales and administrative employees having only occasional, incidental exposure to fumes. Thus, even if the recent wave of mass tort welding fume litigation subsides, distributors will remain exposed to liability from traditional, single-plaintiff lawsuits, and distributors can expect to see such suits filed with increasing frequency.

The cost of defending even one single-plaintiff toxic exposure lawsuit can easily exceed $100,000 per year in attorney fees alone. Unfortunately, most distributors remain uninsured against such claims—at least for exposure occurring after 2004. Practically all mainline domestic carriers continue to specifically exclude coverage for liability associated with welding fumes or arising from welding consumables, such as rods or wire. As a consequence, distributors face the prospect of bearing the cost and expense of defending suits on at least a pro-rated basis for periods of exposure occurring after the welding fume exclusion, not to mention liability for any judgment rendered.

Stated another way, most distributors remain at least partially uninsured against risks relating to the sale and distribution of one of the riskiest and highest-volume product lines offered. And while manufacturer indemnification agreements are a good thing to have, they are no substitute for insurance. There is no guarantee that those manufacturers who stepped up and bore the brunt of defending welding fume litigation to date will continue to pick up the tab moving forward.

The good news is that several carriers have recently begun offering specialty insurance products to cover fume-related risks. As much as $5 million in coverage is currently available from several carriers on an affordable basis. While such products will not cover the period between 2004 and present, they will provide coverage on an ongoing basis for exposure alleged after the effective date. By combining currently available coverage with coverage in place before the welding fume exclusion, distributors can limit the coverage gap created by the fume exclusion to a period of seven years or less. Make sure you understand any additional exclusions or limitations which may result in other coverage gaps, such as exclusions for asbestos-related liabilities. Contact your insurance broker to find out what options are available for your business.

(Disclaimer: The information provided in this column is a service provided by GAWDA for informational purposes only and should not be considered legal advice.)

Gases and Welding Distributors Association


Michael Degan Meet the Author
Michael Degan is GAWDA’s joint defense fund coordinating counsel for welding fume litigation and a partner with the law firm of Husch Blackwell LLP. Members can reach him at 402-964-5000 and mike.degan@huschblackwell.com.