Zalma on Insurance
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Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
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July 25, 2024
Unambiguous Pollution Exclusion Enforced

Gasoline Leaking into a Natural Spring is Excluded Pollution
Post 4842

Read the full article at https://lnkd.in/gebS35Sg, see the full video at https://lnkd.in/gSN4EZuM and at https://lnkd.in/gtr2XKCJ and at https://zalma.com/blog plus more than 4800 posts.

In Erie Insurance Exchange v. SHRI BRAMANI, LLC; ERIC MOBERLY; KAP LEASING, INC.; KEVIN MOBERLY; MOBERLY BROTHERS PROPERTIES, LLC; AND PRADIPKUMAR PATEL, No. 2023-CA-0169-MR, Court of Appeals of Kentucky (July 19, 2024) the Court of Appeals was asked to reverse a trial court that the insurer’s pollution exclusion did not exclude coverage for the negligent leakage of gasoline from one of the insured’s underground fuel storage tanks onto the neighboring real property owned by Appellees.

BACKGROUND

The Policy

Erie issued a commercial general liability policy of insurance which covered the premises and the operation of the convenience store and gas station on Lane Allen Road. The policy was in force until June 12, 2020. The policy generally provided coverage for legal liability to third parties arising out of bodily injury, property damage, or personal and advertising injury. As with most policies of insurance, the policy contains several exclusionary clauses including an exclusion of coverage for injuries or damages caused by “pollution.”

The Gas Leak

On or about October 17, 2019, the Kentucky Division of Waste Management (“KDWM”) received a telephonic complaint of petroleum odors around the Lane Allen Food Mart. A KDWM official was sent to investigate and noted what appeared to be petroleum leeching through a groundwater spring. Further investigation and testing indicated that the petroleum was coming from one of the Lane Allen Food Mart’s underground petroleum storage tanks.

Lane Allen Food Mart entered into an Agreed Order with the Energy and Environment Cabinet admitting that it had violated Kentucky Revised Statutes (“KRS”) Chapter 224, and the statute’s accompanying regulations, as related to its underground petroleum storage tanks. Pursuant to the Agreed Order, Lane Allen Food Mart consented to an assessed penalty of ten thousand dollars for the agreed-upon violations.

Post-Leak Events

Following discovery of the fuel leak, Moberly Brothers made a claim against Lane Allen Food Mart. Moberly Brothers alleged that the fuel leak caused it to suffer economic harm as a result of widespread, permanent environmental contamination. Specifically, Moberly Brothers asserted that the leaked fuel entered and contaminated a natural water spring located on its property, which rendered the property unfit for the bottled water facility that was planned for the property. Erie denied the claim based on the pollution exclusion contained in the policy. Erie agreed to defend the claim against the Lane Allen Food Mart under a reservation of rights. Subsequently, Erie filed a separate action against its insureds and Moberly Brothers.

ANALYSIS

Kentucky Courts have always strongly adhered to a policy of protecting the reasonable expectations of policyholders. Although insurance carriers have the right to impose reasonable limitations on their coverage, the question then becomes the reasonableness of the condition as a limitation on public policy as opposed to one of strict contract considerations between private parties where no public interest is involved.

Most consumers would recognize that gasoline is a product that becomes a pollutant when it leaks into the ground and contaminates soil and water. Even a valuable and useful product like gasoline can become a pollutant when it contaminates a natural resource.

The focus of the inquiry under the absolute pollution exclusion is not on the nature of the substance alone, but on the substance in relation to the property damage or bodily injury.

Nature of the Alleged Damage.

Where the purported pollutant results in “contamination, negative health or environmental effects,” the exclusion is enforceable. Moberly Brothers alleges significant environmental damage to its real property due to the gasoline that leaked from the Lane Allen Food Mart’s underground storage tank. Moberly Brothers alleged in its complaint that the petroleum gasoline damaged and contaminated its property and seeks damages to restore and recover the use and value of the property. This is precisely the type of pollution-related damage that falls within the scope of the exclusion.

Gasoline is clearly a pollutant when it leaks from an underground storage tank and enters a neighbor’s land and contaminates the water and soil thereon. Because the pollution-exclusion clause is unambiguous, the property damages suffered by Moberly Brothers are not covered by Erie’s policy of insurance, and the trial court therefore erred in entering a judgment against Erie. The judgment was reversed and remanded for entry of a declaratory judgment in Erie’s favor.

ZALMA OPINION

No insurance policy covers every potential risk of loss. Almost every liability policy has a pollution exclusion. Since gasoline, escaping into the land, is obviously a pollutant and the insured admitted to the pollution, the exclusion applied and the insurer neither owed defense or indemnity to the insureds.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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00:08:09
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What else you may like…
Videos
Posts
September 26, 2025
No Way Out After Murder Conviction

Intentionally Shooting a Woman With A Rifle is Murder

Post 5196

See the full video at and at and at https://zalma.com/blog and more than 5150 posts.

You Plead Guilty You Must Accept the Sentence

In Commonwealth Of Pennsylvania v. Mark D. Redfield, No. 20 WDA 2025, No. J-S24010-25, Superior Court of Pennsylvania (September 19, 2025) the appellate court reviewed the case of Mark D. Redfield, who pleaded guilty to third-degree murder for killing April Dunkle with malice using a rifle.

Affirmation of Sentence:

The sentencing court’s judgment was affirmed, and jurisdiction was relinquished, concluding no abuse of discretion occurred.

Reasonable Inference on Trigger Pulling:

The sentencing court reasonably inferred from the guilty plea facts that the appellant pulled the trigger causing the victim’s death, an inference supported by the record and consistent with the plea.

Guilty Plea Facts:

The appellant admitted during the plea hearing...

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September 25, 2025
Prelitigation Communications Privileged

The Judicial Proceedings Privilege
Post 5196

Posted on September 25, 2025 by Barry Zalma

See the full video at and at

Judicial Proceeding Privilege Limits Litigation

In David Camp, and Laura Beth Waller v. Professional Employee Services, d/b/a Insurance Branch, and Brendan Cassity, CIVIL No. 24-3568 (RJL), United States District Court, District of Columbia (September 22, 2025) a defamation lawsuit filed by David Camp and Laura Beth Waller against Insurance Branch and Brendon Cassity alleging libel based on statements made in a letter accusing them of mishandling funds and demanding refunds and investigations.

The court examined whether the judicial proceedings privilege applieD to bar the defamation claims.

Case background:

Plaintiffs Camp and Waller, executives of NOSSCR and its Foundation, sued defendants Insurance Branch and Cassity over a letter alleging financial misconduct and demanding refunds and audits. The letter ...

00:07:56
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September 24, 2025
Untrue Application for Insurance Voids Policy

Misrepresentation or Concealment of a Material Fact Supports Rescission

Post 5195

Don’t Lie to Your Insurance Company

See the full video at and at https://rumble.com/v6zefq8-untrue-application-for-insurance-voids-policy.html and at https://zalma.com/blog plus more than 5150 posts.

In Imani Page v. Progressive Marathon Insurance Company, No. 370765, Court of Appeals of Michigan (September 22, 2025) because defendant successfully established fraud in the procurement, and requested rescission, the Court of Appeals concluded that the Defendant was entitled to rescind the policy and declare it void ab initio.

FACTS

Plaintiff's Application:

Plaintiff applied for an insurance policy with the defendant, indicating that the primary use of her SUV would be for "Pleasure/Personal" purposes.

Misrepresentation:

Plaintiff misrepresented that she would not use the SUV for food delivery, but records show she was compensated for delivering food.

Accident:

Plaintiff's SUV was involved in an accident on August ...

00:07:48
September 09, 2025
The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime

See the full video at and at

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime.

How Elderly Doctors Fund their ...

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September 08, 2025
The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime

See the full video at and at

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime.

How Elderly Doctors Fund their ...

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September 03, 2025

Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit

© 2025 Barry Zalma, Esq., CFE

When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.

On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...

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