Abstract
Insurance coverage for “nonphysical” losses is one of the latest emerging areas of insurance disputes. The two primary examples of such loss are emotional distress claims and stigma damages. Although emotional distress coverage is usually litigated in the context of business torts, its resolution there will affect the toxic tort area, because contamination‐related claims increasingly allege some sort of emotional distress resulting from exposure or threatened exposure to toxic materials. With respect to stigma damages, policyholders are increasingly finding coverage for both third‐ and first‐party claims involving diminution in property value caused by proximity to contaminated land. For each of these examples, this article reports the underlying coverage theories, the arguments against coverage advanced by insurers, the leading cases, and the latest developments.