Insurance coverage is critical for businesses in covering liabilities related to environmental and public health claims, as these can become costly. Businesses should expect that their insurers will have their back when they file a valid claim under the terms of their policy. Unfortunately, insurance companies are out for profit and are keen to limit their coverage obligations whenever possible.  

A recent example of this in the context of environmental claims is a recent federal case out of Pennsylvania involving a school district and its insurers, who tried to deny coverage for liabilities stemming from a class action case in which the district was accused of hiding the fact that there were high levels of lead and copper in its water supply. 

The case apparently arose from the improper use of a potable water system, which resulted in lead and copper leakage into the school water system. The district allegedly knew of the contamination months before it informed parents about it. The issue with the insurers, however, was whether pollution and lead policy exclusions relieved the insurers of the responsibility of defending or indemnifying the district in connection with the class action litigation.

The judge in the case ultimately ruled that the insurers must defend the school district. The basis for the decision was, first of all, that because the pollution exclusions were not clearly written with respect to lead and copper contamination of drinking water, the insurance companies were obligated to cover the school district. As for the lead exclusion, the court said that it does not exclude coverage obligations relating to copper exposure.

In our next post, we’ll say more about this case, particularly as it relates to insurance policy exclusions and how California law deals with disputes regarding such matters.