Question

One of your insured's 18-wheelers is hauling a tank of gasoline and overturns, spilling its contents over the road and into the storm drains. The costs of emergency response and clean up are submitted by the EPA to your insured and your insured turns the claim in under its CGL policy. How would the policy respond?

(A) Pollution, even if sudden and accidental, is excluded by the CGL policy, so the claim is not covered. This claim also arose out of the operation of the insured's automobile risk, and is also excluded under the GL.

(B) All expenses would be paid under the company's Business Auto policy.

(C) All expenses would be paid up to the policy limit for property damage.

(D) The CGL policy would pay the costs of emergency response, but not the EPA's clean up costs.

Answer 1

Option (A) is correct: Pollution incidents are generally excluded by the CGL policy, and automobile risks are also excluded. The claim would typically be covered under a Business Auto policy or a specialized environmental insurance policy.

Step-by-step explanation:

The question addresses how a Commercial General Liability (CGL) policy would respond to a claim involving an overturned 18-wheeler that caused a pollution incident. According to the options provided, the correct answer is (A): Pollution, even if sudden and accidental, is excluded by the CGL policy, so the claim is not covered.

This claim also arose out of the operation of the insured's automobile risk, and is also excluded under the GL. Indeed, such incidents require a specialized form of insurance known as environmental insurance or pollution coverage which is separate from a standard CGL policy.

Standard CGL policies have pollution exclusions, except for very specific and limited circumstances, often referred to as sudden and accidental coverage which is still quite restrictive.

Additionally, since the incident involves an automobile, it would typically fall under a Business Auto policy, which is designed to cover liabilities arising from the operation of company vehicles. The correct option is A.