An insured was hauling asphalt for hire when their truck overturned in the medium of the interstate. It spilled the load and caused damage to the mowed and kept medium area. The insurance company denied the claim for the cleanup of the overturned load for the following reasons:

1) The insured did not cause bodily injury or property damage as defined in the policy to the company that was hired to clean up the spilled asphalt.

2) Payment for the cleanup company’s services was assumed under contract, which is excluded from coverage under this policy.

3) Services rendered for the cleanup arose from property that was in the insured’s care, custody and control, which is excluded from the policy.

4) The property being hauled does not qualify for pollution cost or expense because the property was contained in property owned by the insured and was being transported by the insured, which is excluded from pollution cleanup cost or expense.

Q: The insured thinks that the property damage caused by his vehicle, the cleanup to the damaged earth and removal of the spilled asphalt should be covered because he is liable for the damage. Is the insurer correct in denying the claim? 

Response 1: If insured under the standard ISO policy form, I agree with the insurance company. The cleanup would be covered if the insured purchased the proper pollution coverage.

The standard ISO policy form only includes pollutants that come from truck operating parts, such as gas or oil, not asphalt. Pollution liability broadens coverage for covered autos. Endorsement CA 99 48 might have helped.

Response 2: Insurance policies don’t provide coverage just because the insured is liable. The policy has exclusions to eliminate coverage for liability that is not contemplated in the rate. The business auto policy excludes pollution cost or expense from the cargo carried by the insured. In this case, asphalt is the pollutant. The damage to the median is clearly excluded by the policy and the insurer has correctly denied it.

The insured should have bought coverage for pollution exposures. If you knew the insured was hauling asphalt, I recommend you report this to your errors & omissions carrier in case it becomes a claim.

Response 3: The definition of property damage is: “damage to or loss of use of tangible property.” Remedial costs to clean the median are damages. Whether the payment for the cleanup was assumed under contract is irrelevant. The area wasn't under the insured’s care, custody or control.

The asphalt spill should be treated the same as a load of sand or any other nonpolluting substance. I would check the case law relied upon for the conclusion that the cost to clean the median is not damage to tangible property.

Response 4: Care, custody or control applies to damage to the cargo. Did the insured have cargo coverage? Liability for the dumped cargo is part of the trucking policy, which usually has a required endorsement that covers pollution, but it requires the insured to reimburse the insurer.

Response 5: If the insured voluntarily hired a clean-up contractor, the insurance company is under no obligation to pay. 

 This question was originally submitted by an agent through the VU’s Ask an Expert Service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.