In this recent case, a Purchaser sued the Vendor who sold the property with two hidden underground storage tanks (“USTs”). The cost to have the USTs removed was potentially very significant. The Vendors brought a motion to get their insurance company to defend them, and if a judgment was rendered against them, to get the insurance company to pay that judgment.
The Vendor lost this “coverage” motion. In the end, the court ruled that the insurance company did not have to defend, nor indemnify, the Vendor policy-holder.
The case delves heavily into insurance policy wording and interpretation, however, in the end the judge basically summed things up as follows:
- There was a pollution exclusion clause in the policy;
- The pollution exclusion clause was written in plain English and easy to understand;
- Everything about the claim centered around pollution – essentially, this claim would likely not exist if it were not for the worries and concerns over the USTs leaching pollutants into the air and into the soil underneath the building;
- The fact that there was possible insurance coverage to comply with regulatory requirements (and there is a regulation that requires decommissioned USTs to be removed), the nature of the claim was still a claim for pollution, and the pollution exclusion specifically mentioned that there was no coverage for costs incurred to comply with statutory or regulatory requirements;
Remember, however, that commercial insurance policies can be written very differently since there is no standard wording for such policies: as such, it is important to seek legal advice if you find yourself in the same situation, because there may be nuances in the policy wording that could lead to a different result.
Kin v. Ecclesiastical et al, 2022 CanLII 18989
https://www.canlii.org/en/on/onsc/doc/2022/2022canlii18989/2022canlii18989.html