Choice of Laws in Connecticut Insurance Policies

"Most significant contacts” test adopted in Reichhold Chemicals, Inc. v. Hartford Accident & Indemnity Co. , 243 Conn. 401 (1997). In abandoning the traditional lex loci contractus approach, the Supreme Court declared that insurance coverage claims would generally be interpreted in accordance with the state in which the bulk of the contracting transactions took place but that, in the case of liability policies, unless another state has an overriding policy-based interest in the application of its law, the law of the state in which the insured risk is located should be applied. As a result, the Supreme Court declared that a trial court had erred in applying New York law to late notice issues involving pollution claims at the insured's facility in Tacoma, Washington. Two years later, the court declared that choice of law disputes will be resolved based on the location in which the insured risk is located. In Reichold Chemicals, Inc. v. Hartford Accident and Indemnity Company , 750 A.2d 1051, 1054-1055 (Conn. 2000), the court ruled that the availability of coverage for environmental liability claims involving a site in Washington state must be judged in accordance with Washington law, not the law of New York. In ruling that Judge Aurigemma erred in granting summary judgment for various insurers based on New York law, the Connecticut Supreme Court declared that Washington's interest in cleaning up pollution far outweighed any interest New York might have as the place where the policies were contracted for. A federal district court has since ruled that this “location of the insured risk” approach required the application of Connecticut law to the issue of “advertising injury” coverage as the underlying suit was filed in Connecticut, even though the policy was issued in Rhode Island to a Rhode Island business. Lumberman's Mutual Casualty Company v. Dillon Company, Inc. , 2000 U.S. Dist. LEXIS 13830 (D. Conn. August 31, 2000). Earlier cases had ruled that such decisions would be governed by place of contracting, unless the contract is to have its operative effect or place of performance in a jurisdiction other than the one where it was entered into, in which event the law of the state of operative effect or performance governs its validity and construction. Whitfield v. Empire Mutual Ins. Co. , 167 Conn. 499, 505-506, 356 A.2d 139, 143 (1975); See also Breen v. Aetna Cas. and Surety Co. , 153 Conn. 633, 637, 220 A.2d 254, 256-257 (1966); Grand Sheet Metal Products Co. v. Aetna Cas. and Surety Co. , 500 F.Supp 904, 908-9 (D. Conn. 1980); and Masarjian v. Mark Lighting Fixtures Co., Inc. , 595 F.Supp. 869, 870 (D. Conn. 1984).
Source : insurance.com