One of the most critical issues in litigation over coverage for long-tail environmental liabilities is the application of the “qualified pollution exclusion” and in particular the carve-out for pollution that is “sudden and accidental.” A new decision from an Oregon federal court tackled this question: Is “sudden and accidental” to be evaluated from the perspective of the policyholder (who may not have done the polluting, but may still be on the hook merely as purchaser of the property) or from the perspective of the polluter/former occupant of the site, who may be long gone? This court held that it is the perspective of the policyholder that counts. This is a significant win to the many companies that may be facing similar disputes with contaminated sites in Oregon in the near future.
Background on the “Qualified Pollution Exclusion.” Throughout history, most general liability policies had no “pollution” exclusion applicable to property damage. In 1973, an exclusion was inserted to the standard-form “CGL” policy that has come to be known as the “qualified pollution exclusion.” In most forms the exclusion reads as follows: Continue Reading