Our insured's employee was hauling coconut oil in containers in the back of their company van. At an intersection, the employee had to brake hard to avoid an impact - unbeknownst to the employee, the sudden braking caused the containers of oil to burst/leak onto the roadway. The employee continued driving away - he later noticed the oil leaking from the containers and pulled over on the side of the roadway. A short time later, a police officer pulled behind him and informed him that a significant amount of oil had leaked at the intersection where the sudden braking had occurred and had been the cause of another accident. (A vehicle attempted to brake at the intersection, lost control, and struck another vehicle).
The fire department responded to the scene and billed the insured for the oil cleanup as a hazmat incident.
According to the coconut oil's product data sheet, it is a non-hazardous food product.
We are looking into whether the Liability / Pollution exclusion would be applicable to the accident that occurred as a result of the oil spill at the intersection where the coconut oil spilled.
The pollutant definition from CA 00 01 11 20 is as follows: L. "Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
Wisconsin Subscriber
Coconut oil is a food source and in our opinion is not a pollutant to which the pollution exclusion would apply in this particular situation. The only case law we could find in any way relative was Mountain State Mutual Casualty Company v. Hog’s Breath (federal trial, Colorado appellate reversal), where a restaurant’s cooking oil spill was at issue. The insurer invoked the pollution exclusion, citing a broad definition of “pollutant.” The Colorado appellate court disagreed, holding that applying that exclusion to cooking oil led to absurd results. This was a first-party claim but with essentially the same definition of "pollutant" as the stated commercial auto liability coverage definition.
The "irritant or contaminant" qualification in the "pollutant" definition implies that the exclusion applies to things like "...including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste...." Applying the contract interpretive doctrine of noscitur a sociis ("it is known by its associates"), we don't see coconut oil as being anything like these terms.
A contaminant is something that contaminates, and to contaminate is:
a: to soil, stain, corrupt, or infect by contact or association,
Bacteria contaminated the wound.
b: to make inferior or impure by admixture
to make unfit for use by the introduction of unwholesome or undesirable elements
water contaminated by sewage
If you pour water into a gas tank you've contaminated the gas - but water generally isn't a pollutant. In and of itself, food grade coconut oil or olive oil or pancake syrup or anything similar should not be considered a pollutant given this definition.
This was an accidental spill of a non-hazardous food source and would not seem to indicate a need for a hazmat cleanup that would be associated with a spill of a chemical contaminant; as such the loss and its cleanup should not be excluded by the pollution exclusion.