Dirty Business – Contamination Exclusion Clause Upheld

Ground contamination in residential property is not only an environmental concern, but is also an expensive issue for insurers in Canada. The contamination often results from a leak in a residential heating oil tank. When these leaks occur, home owners invariably make a claim against their home insurance, many of which policies contain various forms of contamination exclusion clauses. The issue that commonly arises is the definition of 'contamination' and what is actually excluded. Many policies attempt to define the term, but in doing so risk adding ambiguities into the policy.

A contamination exclusion clause was reviewed in Corbould v BCAA Insurance Corp., 2010 BCSC 1536, when the insured sought coverage for damage when an above ground residential fuel oil tank leaked hundreds of litres of oil. The relevant policy provision was: