Powerine II – Significant Insurance Coverage Implications for Administrative Cleanup Costs

In welcome news to umbrella policyholders, the Supreme Court of California issued an opinion on August 29, 2005 in Powerine Oil Co., Inc. v. Superior Court, 2005 DJDAR 10545 (Cal. Aug. 29, 2005) ("Powerine II") that could breath life into policyholder efforts to recover costs of complying with pollution cleanup and abatement orders issued by administrative agencies -- costs that the court previously held are not covered under standard comprehensive general liability (CGL) insurance policies. See, Certain Underwriters at Lloyd’s of London v. Superior Court, 24 Cal.4th 945 (2001) ("Powerine I").

In Powerine II, the California Supreme Court held that under a literal reading of the standard excess/umbrella liability policies at issue, the wording of the insuring agreement is broad enough to include coverage of environmental cleanup and response costs ordered by an administrative agency.