The insurer disagrees and has declined the claim without giving any reason. As we see it, the only ambiguities in the pollutant clean up provision are the words “disperse” and “extract.” These words are not defined in the policy and so the common dictionary definition will support the insured's reasonable expectation that this loss is covered. Do you believe that we are correct or is no coverage applicable?

Illinois Subscriber

Unfortunately for this insured, there are many obstacles to his claim for coverage under the building and personal property form. The policy states that coverage applies to “direct physical loss of or damage to Covered Property…caused by or resulting from any Covered Cause of Loss.” Although the insured has been damaged monetarily, his property has not been damaged by the barrels of waste. As you point out, the barrels did not spill or leak any waste. Although the insured temporarily lost the use of that part of the parking lot on which the barrels were deposited, this loss of use was not direct physical damage to the parking lot.

Coverage under the pollutant clean up and removal coverage of form CP 00 10 is unlikely. That coverage pays the insured's expense “to extract 'pollutants' from land or water…if the release, discharge or dispersal of the 'pollutants' is caused by or results from a Covered Cause of Loss…” First, for coverage to apply, the pollutants must have been released, discharged, or dispersed onto or into the insured's land. In this case, the barrels of waste remained intact without any release, discharge, or dispersal of pollutants into or onto the land. The pollutants were only dispersed into the barrels. Second, the meaning of “extract” is not synonymous with “remove” or “dispose.”  According to Webster's unabridged dictionary, to extract is to “separate or otherwise obtain…from a substance by treating with a solvent…distilling, evaporating, subjecting to pressure or centrifugal force, or by some other chemical or mechanical process.” Your insured did not have to subject his land to any process in order to extract the pollutants from the soil.

Whether the placing of the barrels on the property is “vandalism” (i.e., “willful and malicious damage to, or destruction of, the described property”) is doubtful. This would certainly constitute trespass, but as previously stated, there was no destruction or damage to property.

Also, the cost of testing the waste to determine what it is would not be covered because it is a purely monetary loss to your insured. Even if the barrels had leaked, coverage would only apply to the costs of ridding the land of pollutants—not to the costs to test the waste and dispose of what remained in the barrels.

Much the same reasoning would apply to deny coverage under the special causes of loss form (CP 10 30 04 02). That form states that the insurer “will not pay for loss or damage caused by or resulting from…release, discharge or dispersal of 'pollutants' unless the release, discharge or dispersal is itself caused by any of the 'specified causes of loss'” (emphasis added). Vandalism is one of the specified causes of loss, but the element of direct physical damage is missing and there has been no discharge or dispersal into the environment.