Category Legal Affairs

Exclusion for owned or occupied property upheld

21 January 2016 Norton Rose Fulbright

A US New Mexico federal court upheld an exclusion for pollution cover which excluded damage to property that the insured owns, rents or occupies including sums paid for the repair, restoration or maintenance of the property and paid to prevent injury to third party property.

The insured operated a ski resort under licence from the US Department of Agriculture. An oil and water separator maintained by the insured failed, threatening underlying ground water and a nearby river. Working with the government the insured successfully abated the contamination at an expense of more than $1 million which it claimed from the insurer. The lower court applied the exclusion and found for the insurer.

The insured alleged that the exclusion did not apply because it was against public policy. The insured would be encouraged to take no preventive action and only lodge a claim when there was actual third party damage.

The court held that this argument overlooked the other exclusion of “expected or intended” property damage. Had the insured ignored the report that the pollution would inevitably migrate to third party property, the insured would still not have had a claim because the property damage was “expected”.

First published by: Financial Institutions Legal Snapshot

Quick Polls


What is your one-liner for the 2024 National Budget speech?


Creepy failure to adjust income tax, medical tax credits
Overall happy, it should support economic growth
Overall unhappy, soaring public sector wages and broken SOEs suck..
There are too few taxpayers, too many grant recipients.
fanews magazine
FAnews February 2024 Get the latest issue of FAnews

This month's headlines

On the insurance industry’s radar in 2024
Insurers, risk managers unsure of AI’s judgement credentials
Is offshore the place to be in 2024?
Gap claims: erosion of medical benefits, soaring specialist fees
Investments and retirement… is conventional wisdom under threat?
Subscribe now