This is a loss in Oregon.
The claimant alleges oil spilled from the insured's trucks; the insured denies it was their trucks but went out and treated the spill anyway with a chemical. We have the MSDS sheet for it – Purple Power and it has Skin Irritation Category 2; Eye Irritation Category 2; and Acute Toxicity, Oral Category 4; and HMIS rating of Moderate ("pollutant"? see question below).
The letter of representation speaks to injuries from the Purple Power and not from the alleged oil spill from the insured's trucks. However, prior to the letter of rep, the claimant complained of the oil causing property damage to his home and landscape. Seems like they gave up on blaming the insured for the oil spill (for now) because they can't prove it and are focusing on the Purple Power being the cause for alleged injury(ies).
Does this get past the insuring agreement and/or definitions (i.e. "accident"). Does this arise from the (undefined) ownership, maintenance or use of an "auto" ?
If suit is filed, is there a duty to defend?
Is Oregon a 4-corners or 8-corners jurisdiction?
Can extrinsic evidence be used to consider coverage – i.e. the insured's position it was not their trucks but they were nice neighbors and tried to clean it up anyway?
Does the pollution exclusion apply? Please note the CA 99 48 10 13 Form as part of the policy.
This may be CGL (which we don't write) who is also on notice.
Oregon Subscriber
There is nothing in the business auto policy that will provide coverage for this loss. The auto policy will cover pollution accidents that take place off the insured's premises that result in a leak of pollutants due to the accident, or if pollutants are spilled or leaked from a container designed to hold such pollutants, as follows:
Paragraphs b. and c. above of this exclusion do not apply to "accidents" that occur away from premises owned by or rented to an "insured" with respect to "pollutants" not in or upon a covered "auto" if:
(a) The "pollutants" or any property in which the "pollutants" are contained are upset, overturned or damaged as a result of the maintenance or use of a covered "auto"; and (b) The discharge, dispersal, seepage, migration, release or escape of the "pollutants" is caused directly by such upset, overturn or damage.
Since the leakage was not due to an accident, and it did not come out of a container, then this exception does not apply and thus the loss is excluded.
As for the coverage provided by CA 99 48, this pollution exclusion exception only applies while the insured vehicle containing the pollutants is moving and excludes the coverage when it is stopped at its destination, as follows:
"Covered pollution cost or expense" does not include any cost or expense arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants":
a. Before the "pollutants" or any property in which the "pollutants" are contained are moved from the place where they are accepted by the "insured" for movement into or onto the covered "auto"; or
b. After the "pollutants" or any property in which the "pollutants" are contained are moved from the covered "auto" to the place where they are finally delivered, disposed of or abandoned by the "insured".
Since the insured opted to apply chemicals to clean up the spills however, they have assumed liability for damages from their work application of the chemicals. That damage however is not covered under the auto policy, and it is excluded under the CGL by exclusion l. Damage to Your Work, as follows, unless the insured did not apply the chemicals themselves but had it done by a subcontractor:
l. Damage To Your Work "Property damage" to "your work" arising out of it or any part of it and included in the "products completed operations hazard".
This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.
Since the loss is clearly excluded, it is doubtful that the insurer will provide a defense for the insured's actions and they are not required to do so under the terms of the policy. If there is any part of the loss that could possibly be covered then the insurer will be required to provide a defense, but based on the facts of the circumstances as they've been described, the policy would not be triggered for either coverage nor defense.
The Oregon Supreme Court has ruled that the "8-corners rule" is valid in Oregon; in Allianz Global Risks US Ins. Co. v. Ace Prop. & Cas. Ins. Co., 489 P.3d 115 (Or. 2021).
One part of the findings of this case is that whether an insurer has a duty to defend an action against its insured depends on two documents: the complaint and the insurance policy. An insurer has a duty to defend an action against its insured if the claim against the insured stated in the complaint could, without amendment, impose liability for conduct covered by the policy. The duty to indemnify is independent of the duty to defend. Even when an insurer does not have a duty to defend based on the allegations in the initial complaint, the facts proved at trial on which liability is established may give rise to a duty to indemnify if the insured's conduct is covered. In order for the duty to indemnify to arise, the insured must be liable for harm or injury that is covered by the policy.