Asbestos Cleanup Costs Covered Under Premise Pollution Liability Policy U.S. District Court for the Western District of Missouri, March 16, 2018
MISSOURI — A federal district court in Missouri held that Illinois Union Insurance Company was obligated to defend and indemnify its insured, Sunflower Redevelopment, LLC, with regard to requests from a state environmental agency to investigate the possibility of contamination by asbestos and other pollutants at a site that Sunflower was remediating.
Sunflower and the U.S. Army were subject to a consent order from the Kansas Department of Health and Environment (KDHE) requiring them to remediate contamination at a former army ammunition plant. In compliance with the consent order, Sunflower obtained custom insurance from Illinois Union Insurance Company (ILU) for its work at the plant. In 2008, KDHE sent a letter to Sunflower requesting that Sunflower submit a work plan to investigate the possible presence of several contaminants, including asbestos, in certain areas of the plant. Sunflower construed the letter as a third-party claim against it and submitted a claim to ILU.
ILU contested coverage, arguing that the cost for investigating a potential pollution condition was not covered. According to ILU, even though its policy defined covered remediation costs to include costs associated with investigating a pollution condition, the coverage did not extend when there was no known “actual” or “existing” pollution condition. The court disagreed, noting that the qualifying terms “actual” and “existing” did not appear in the relevant policy definitions.