In Aearo Technologies LLC v. ACE American Insurance Co., C.A. No. N23C-06-255-SKR CCLD (Del. Super. Ct. 7/16/2024)(unpublished), Aearo and its parent company 3M were sued by numerous plaintiffs alleging hearing-related injuries resulting from Aearo’s earplugs. Aearo and 3M ultimately resolved the underlying lawsuits for more than $6B and incurred “hundreds of millions” in defense costs. In July 2023, Aearo and 3M filed suit against numerous liability insurers seeking recovery of these amounts, and that litigation is ongoing. In July 2024, the court ruled on several summary judgment motions, including one addressing the issue of whether Aearo defense costs paid by 3M count towards satisfaction of self-insured retentions under policies that were issued to Aearo and did not include 3M as an insured. The court ruled that, where the policy provides that the SIR must be paid by either “you”—defined as the named insured Aearo—or the “insured,” payments made by 3M do not count towards SIR satisfaction. Notably, the court rejected the insureds’ argument that requiring 3M to transfer funds to Aearo so that Aearo could then pay the defense costs (which would count towards the SIR) was a “pointless formality.” The court states: “The purpose of requiring the insured pay the retention is so that the insured can partially bear the costs of the risk that is being insured.” The court notes that 3M, as a non-policyholder, is not bound by any restrictions or requirements of the policies.
Delaware Trial Court Enforces Policy Language Limiting Who Can Satisfy Self-Insured Retention
