he local press. In other words, the company was well on its way to making a negligence case against itself.
b. Critical issues. A potentially hidden legal issue in a case where the company does not gain control quickly over the unfolding crisis is that it may by permitting damaging unguarded statements to be made vitiate its own liability insurance coverage. Liability carriers in the 1980s were caught by surprise by the huge liabilities generated by oil spills. The typical liability insurance policy states that the insurance carrier is not liable for intentional (or reckless misconduct) by the insured. It is not known in the case what liability insurance Ashland Oil carried nor its terms nor what state law the policy incorporates. A typical provision is that contained in sec. 533 of the California Insurance Code, "an insurer is not liable for a loss caused by the willful act of the insured." Even if the liability insurance carrier is ultimately liable, it may take advantage of admissions made by the insured's employee
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