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September 22, 2016  

 
 Q&A of the Week
Limited Pollution Liability Coverage

A Colorado subscriber recently asked the following question:

My client owns some property that is currently leased to others who use the site as a small grocery store. If the tenants were to put in an underground storage tank for gasoline sales, would endorsement CG 24 15, the limited pollution liability extension endorsement provide sufficient coverage for my client in the event of a pollution claim? Or, should we provide an underground storage tank policy for our client?


ANSWER: CG 24 15 replaces the pollution exclusion (f) found in the standard CGL form. It provides limited protection, subject to an aggregate limit shown in the endorsement's schedule, for some on-premises exposures that could face a landowner. Under the standard CGL form, coverage for bodily injury or property damage arising out of the dispersal, discharge, release, or escape of pollutants at or from premises owned by any insured is excluded. CG 24 15 deletes this part of the pollution exclusion thereby giving coverage to a landowner like your client. However, that same endorsement declares there is no coverage when a pollutant escapes at or from a storage tank or other container that is below the surface of the ground and that subsequently is exposed by erosion or excavation, allowing the pollutant to escape at a premises owned by any insured.
So, while your client would have some limited liability protection if the storage tank leaks gasoline by using CG 24 15, that protection is gone if the storage tank is somehow exposed and the pollutants then leak out and cause damage.
As for the underground storage tank policy, CG 00 42, that policy states that damages and injuries due to the escape of pollutants from an underground storage tank are covered, subject to listed exclusions. CG 00 42 is a claims-made policy so the bodily injury and property damage have to occur after the retroactive date shown in the declarations and before the end of the policy period, and of course, a claim for damages has to be made in writing during the policy period or any extended reporting period.
If you use either CG 24 15 or CG 00 42, your client will have liability coverage on a limited basis. You should consult with your client and the insurer to obtain the better choice.
 Read More
 
 What's New This Week in FC&S
Attractive Nuisances

"Attractive nuisance" is a term well known within the insurance industry; it is something hazardous that is tempting and can be harmful to children. Read More
 
 Litigation Watch
Because of Bodily Injury

The insured's general liability insurer brought an action against the insured for a declaratory judgment that it owed no duty to defend the insured in an underlying lawsuit. This case is Cincinnati Insurance Company v. H.D. Smith, LLC, 2016 WL 3909558.

West Virginia sued H.D. Smith and other pharmaceutical distributors, seeking to hold them liable for contributing to the state's epidemic of prescription drug abuse. West Virginia alleged that the defendants acted negligently, recklessly, and in contravention of West Virginia law, and that this cost the state hundreds of millions of dollars every year.
 Read More
 
 Fraud of the Week
Insuring Agent Fraud – California
AMOUNT: Unknown


Arraignment has been set for a former California insurance broker who has been charged in a decade-long automobile insurance scheme. Read More
 
   
 FC&S Ask the Experts
Did you realize that the Q&A section of FC&S is made up of questions submitted by subscribers like you?

Paid subscribers to FC&S Online or print FC&S Bulletins are invited to submit insurance coverage questions to the editors. We'll provide a personalized opinion within five business days. (We'll let you know if it will be longer than that. Sometimes we have to gather research or other supporting materials).

Who knows? Your question may be featured (anonymously) in the online Q&A of the Week or as an FC&S update.

Submit your coverage interpretation question right to the editors of FC&S for quick and reliable information. Ask our expert staff a question by clicking here.
 
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 Contact Us
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Contact us at:
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The Zalma Insurance Claims Library
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Construction Defects Coverage Guide
Your single-source for identifying, insuring, investigating, prosecuting, and defending cases that result from construction defect claims. More Info
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FC&S Team
Kelly Maheu, J.D.
Publisher
  Diane W. Richardson, CPCU
Consulting Editor
Christine G. Barlow, CPCU
Managing Editor, FC&S
  Diana B. Reitz, CPCU, AAI
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David D. Thamann, J.D., CPCU, ARM
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  Emily Brunner
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Barry Zalma, Esq., CFE
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  Donna Cozatchy
Creative Director
Hannah Smith, J.D.
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