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⚖️ '''Last exposure rule''' is a legal doctrine used to assign [[Definition:Insurance claim | insurance coverage]] responsibility in [[Definition:Long-tail liability | long-tail]] claims — particularly those involving [[Definition:Occupational disease | occupational disease]], environmental contamination, or [[Definition:Product liability insurance | product liability]] — by holding that the [[Definition:Insurance policy | policy]] in effect at the time of the claimant's last exposure to the injurious condition is solely responsible for the entire loss. Under this rule, if a worker was exposed to asbestos over a 20-year career spanning multiple [[Definition:Policy period | policy periods]] and different [[Definition:Insurer | insurers]], only the insurer on risk during the final period of exposure would bear the full [[Definition:Indemnity | indemnity]] and [[Definition:Defense costs | defense costs]]. The rule emerged in American [[Definition:Tort law | tort]] jurisprudence and has had profound consequences for how insurers and [[Definition:Reinsurer | reinsurers]] allocate and reserve for latent injury claims.

🔧 Courts and insurance practitioners have grappled with the last exposure rule because it creates a stark winner-take-all allocation that can impose enormous liability on a single policy year while leaving all prior years untouched. This stands in contrast to alternative allocation methods such as the [[Definition:Continuous trigger | continuous trigger]] or [[Definition:Pro rata allocation | pro rata allocation]], which spread liability across all triggered policy periods. Jurisdictions in the United States are split: some states, such as New Jersey, have historically applied the last exposure rule in certain contexts, while others favor joint or pro-rata approaches. Outside the U.S., the principle finds rough parallels in some Commonwealth jurisdictions, though the UK Supreme Court's landmark ''Fairchild v Glenhaven'' and ''Trigger'' litigation adopted different reasoning, and European civil-law systems generally handle long-tail allocation through distinct statutory frameworks rather than exposure-based triggers.

📌 The practical impact on the insurance industry has been significant. Under the last exposure rule, a single [[Definition:Policy year | policy year]] can accumulate catastrophic aggregate losses, leading to severe [[Definition:Reserve | reserve]] volatility for the insurer caught at the end of the exposure chain. [[Definition:Reinsurer | Reinsurers]] face similar concentration risk in their [[Definition:Excess of loss reinsurance | excess of loss]] layers. Historically, the rule contributed to insolvencies among carriers with heavy [[Definition:Asbestos liability | asbestos]] and environmental exposure, because it defeated assumptions that losses would be spread across decades of coverage. For [[Definition:Underwriter | underwriters]] and [[Definition:Risk manager | risk managers]] today, understanding which allocation doctrine applies in a given jurisdiction is essential when structuring long-tail [[Definition:Liability insurance | liability]] programs, setting [[Definition:Case reserve | reserves]], and negotiating [[Definition:Reinsurance | reinsurance]] recoveries.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Continuous trigger]]
* [[Definition:Pro rata allocation]]
* [[Definition:Long-tail liability]]
* [[Definition:Asbestos liability]]
* [[Definition:Occurrence policy]]
* [[Definition:Claims-made policy]]
{{Div col end}}

Definition:Last exposure rule - Revision history

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