Fourth Circuit Declines To Find Insurance Coverage For Superfund Cleanup Expense

The Fourth Circuit recently ruled that Comprehensive General Liability (CGL) coverage was unavailable for the expenses incurred by the insured in remediating its own property.  In  Industrial Enterprises Inc. v. Penn America Insurance Company,  (Fourth Cir. No. 09-2346) the Court framed the issue in this way:

In this appeal, we decide whether a standard comprehensive general liability insurance policy ("CGL policy"), which indemnifies the insured for "all sums which the insured shall become legally obligated to pay as damages because of . . . property damage," covers the insured’s liability under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") for costs to remediate the presence of hazardous substances on the insured’s land.

The Court concluded: 

In sum, we hold that Penn America’s standard CGL policy, which provides indemnity to Industrial Enterprises for sums that it becomes legally obligated to pay as damages because of property damage, does not provide indemnity to Industrial Enterprises for regulatory liability (including remediation costs) under CERCLA. And because the standard CGL policy in this case does not provide coverage for CERCLA liability, Penn America had no duty to provide a defense or to pay the costs of a defense with respect to such liability.