Berkshire Hathaway Specialty is asking a Texas court to confirm it’s not on the hook for asbestos lawsuits tied to a failed insurer and a policy exclusion.
The lawsuit, filed July 17 in the US District Court for the Northern District of Texas, stems from hundreds of asbestos-related claims filed against Murco Wall Products, a Fort Worth-based manufacturer of drywall and paint products. Murco has been sued in multiple states by plaintiffs who say they were exposed to asbestos in the company’s products. According to the complaint, Murco expects more suits to follow.
Berkshire, formerly known as Stonewall Insurance Company, issued two umbrella liability policies to Murco during the early 1980s. Each policy carried $5 million in limits and was written to sit above certain primary insurance layers. But those primary policies, the complaint says, have been exhausted or belong to insurers that later went insolvent.
Berkshire now finds itself named by Murco as the designated insurer on 17 pending lawsuits in Illinois, Missouri, Maryland, and Texas. The suits include Brown v. 4520 Corp., Gast v. Asbestos Corp. Ltd., and Duvall v. DAP Products, Inc. – each alleging bodily injury linked to asbestos exposure. Berkshire says Murco officially “selected” it for defense and indemnity on those cases under Texas law.
But Berkshire argues it shouldn’t have to pay. In its complaint, the insurer points to a pollution exclusion clause in its policies. The exclusion, it claims, bars coverage for damage arising from the “discharge, dispersal, release or escape of irritants or contaminants,” unless that release was “sudden and accidental.” Berkshire says the asbestos claims against Murco don’t meet that threshold, and it’s asking the court to confirm that it has no coverage obligations on that basis.
The suit also pulls in Canal Insurance Company and Interstate Fire & Casualty Company, which issued excess liability policies to Murco for the 1984-1985 and 1985-1988 policy periods, respectively. Like Berkshire’s policies, both sit above primary insurers that have since been liquidated.
Berkshire wants the court to determine whether it has the right to recover defense or settlement contributions from Canal and Interstate if it is forced to pay. The company also seeks guidance on how coverage should attach when the underlying insurer is gone, and how liability should be split across policies if more than one is triggered.
At the core of the dispute is a question many in the insurance industry know well: who pays when old policies run out and old insurers go under? Berkshire’s filing is the latest example of how insurers continue to grapple with the fallout from long-tail liabilities like asbestos – claims that arrive decades after the policies were sold and well after some carriers have vanished.
For commercial insurers and claims professionals, the case spotlights a growing concern over insolvency gaps and the limits of legacy coverage structures. The outcome could shape how future disputes over umbrella and excess policies are resolved when primary layers collapse.
