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Insurer has no duty to indemnify city in pollution case

Posted On: May. 17, 2019 2:11 PM CST


RLI Insurance Co., which provided umbrella coverage to the city of Visalia, California, has no duty to indemnify or defend the municipality in a pollution case based on a policy exclusion, says a federal appeals court in affirming a lower court ruling.

Peoria, Illinois-based RLI had provided coverage to the city for the March 1978-79 period, according to the complaint in Thursday’s ruling by the 9th U.S. Circuit Court of Appeals in San Francisco in RLI Insurance co. v. City of Visalia, et al.

In a two-page ruling affirming the U.S. District Court in Fresno, California’s ruling, a three-judge appeals court panel held RLI had no duty to defend the city in underlying litigation.

RLI’s policy excludes coverage “for the cost of removing, nullifying or cleaning up substances” including toxic chemicals and does not include an exception to its exclusion for “sudden and accidental” discharges, it said.

“Because the complaint in the underlying action sought recovery only for the costs of removing, nullifying, or cleaning up contaminants or pollutants, RLI has no duty to defend or indemnify Visalia in that action,” said the panel in affirming the lower court’s ruling.

An RLI spokesman and attorneys in the case could not immediately be reached for comment.