Insurance Coverage for Environmental Cleanup

Indiana Farm Bureau Ins. Co. v. Harleysville Ins. Co. (Ind. Ct. App. March 16, 2012)

- Originally published March 19, 2012

This insurance coverage dispute regarding coverage for proceedings related to the remediation of contamination at a gas station gave the Court of Appeals the opportunity to discuss the known loss doctrine and the reasonable notice requirement present in most general liability policies.

The known loss doctrine prohibits one from obtaining insurance for a loss that has already occurred. The Court found a question of fact as to whether the insured knew of the condition at the gas station despite evidence that a company that performed a site assessment had informed the Department of Environmental Management of contamination. The Court noted that there was no evidence in the record that the company had informed the insured of the contamination.

With regard to the notice issue, the Court again found a question of fact that precluded summary judgment. In finding a question of fact, the Court again commented on the lack of designated evidence showing that the insured knew of the contamination at the time of the site assessments.

These holdings demonstrate the necessity of designating sufficient evidence in support of summary judgment motions, even evidence that may seem like common sense (as the Court noted, “it may be that such requests for [site] assessments invariably . . . lead to site remediation”). The holding also confirms that at the summary judgment stage, circumstantial evidence may be insufficient to establish actual knowledge.