In Travelers Indemnity Company v. MTS Transport, LLC, 2012 U.S. Dist. LEXIS 127847 (W.D. Pa.), the Court was confronted with a situation where a tanker truck spilled petroleum asphalt on a highway, damaging the highway and multiple vehicles. The tanker truck owner, MTS, tendered a claim for defense and indemnity against its excess insurer, Hallmark.
Hallmark denied coverage, noting that the excess policy at issue had an "absolute" pollution exclusion, which provided that there would be no coverage from any "injury, damage, expense, cost, loss, liability or legal obligation arising out of or any way related to pollution, however caused." The case turned on whether the policy's reference to "pollution" should be deemed to include petroleum asphalt.
After finding that Maryland law should apply to the case, the District Court concluded that the policy exclusion's reference to "pollution" was vague when considered in the context of petroleum asphalt. The Court noted, among other things, that petroleum asphalt is not listed as a hazardous substance under CERCLA and that the exclusion was arguably designed to apply only to "traditional environmental pollution". In any event, the Court concluded that the exact meaning of the reference to "pollution" was vague and that such vagueness entitled the policy holder to the benefit of the doubt in construing the meaning of the policy.
Whether the Court's conclusion would be accepted by other Courts remains a question.Nonetheless, depending on the type of substance/waste at issue on a claim, the case provides some authority for the proposition that even an "absolute" pollution exclusion will not always bar coverage.