No Leaks in This Defense: Carrier Obtained Summary Judgment Regarding Coverage for Gasoline Pipe Leakage

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In a dispute surrounding an installation contract between a policyholder and the thirty-party plaintiff, the insured was alleged to have negligently installed a gasoline pipe leading from a gasoline holding tank to a marina on the third-party plaintiff’s property where gasoline was sold. Specifically, it was alleged that the gas pipe was not buried deeply enough and that it used improperly large backfill material. The pipe leaked approximately 500 gallons of gasoline, causing property damage. The policyholder sought coverage from its insurers. One insurer moved to dismiss the action altogether.

The moving insurer argued that there was no duty to defend because the damage caused outside the policy period, notwithstanding the fact that the installation occurred during the policy period. The court agreed, stating that Missouri law “draws a distinction between the occurrence of a negligent act during the policy period and the occurrence of physical damage that results from the commission of a negligent act during the policy period.”

For a copy of the decision, click here.