November 16, 2010 by Canadian Underwriter
The B.C. Supreme Court has upheld a “pollution exclusion” in a residential property damage case, in which an above-ground storage tank for home-heating fuel oil leaked and damaged the insured’s vacation home.
In Corbould v. BCAA Insurance Corporation, the insured’s property policy said: “We do not insure…(8) loss or damage caused by contamination or pollution, or the release, discharge or dispersal of contaminants or pollutants.”
The policy exclusion does not define “pollution,” “contamination,” “contaminants,” “discharge” or “dispersal,” and its definition of “pollutants” does not explicitly include the word “oil.”
The plaintiff, Brian Bernard Corbould, argued he is a non-commercial, residential homeowner who was not in the business of generating contaminants. He said the key issue was that he was not involved in any business activities that could lead to the pollution of the environment.
Corbould further submitted the pollution exclusion did not apply to his loss because he had a reasonable expectation that it did not exclude liability for the unintended results of the normal operation of his dwelling’s heating system.
In rejecting Corbould’s argument, the court noted the “spill of oil into soil” meets the “common sense” definition of pollution, and the meaning of the exclusion was not ambiguous.
In this case, the insurer held a reasonable expectation that the exclusion applied to oil spills, the court found.
“The insurer submits that the exclusion must have meaning and asks, if the exclusion is not read to cover a fuel spill or leak of a tank on the insured’s property, what is it intended to cover?” the court found. ” “That argument has merit.”