On Tuesday my client was granted summary judgment against Nationwide on the issue of coverage. I originally blogged on this case on February 16, 2009, when we filed suit.
Our client maintains and services sewage lift stations. He purchased a "Contractor’s Liability Insurance Policy" from Nationwide Insurance in order to protect himself against claims arising out of his business operations. Nationwide clearly knew that its insured maintained and serviced sewage lift stations, as that information was set forth in the application and the premiums were based on the proposed insured’s SIC designation as a lift station maintenance company. Nationwide wrote the policy and charged a rather high premium for the liability insurance. According to Nationwide’s underwriting documents, the liability premium was calculated based on the fact that my client was involved in the business of "septic tank installation, repair and maintenance." Nationwide offers this type of "Contractor’s Liability" policy to 32 different kinds of contractors, and the premium charged for sewage related work is only exceeded by the premium charged to those involved involved in excavation work – an ultra hazardous activity.
During the policy periods, a bank which utilized a lift station serviced by our client was flooded with a backup of raw sewage. As hard as it is to believe, the bank took offense, and filed suit against our client for negligently maintaining the sewage lift station. The insured presented the claim to Nationwide Insurance to defend and indemnify, if necessary.
Nationwide denied the claim, claiming that the policy did not cover any losses dealing with sewage. Nationwide tried to exclude coverage under its “pollution” exclusion. The pollution exclusion does not specifically state that sewage is pollution.
I filed suit for breach of contract. Section 627.419(1) states that the application for insurance is part of the policy and can expand, extend and modify the coverage provided under the policy. In this case, the application identified the insured as being in the business of sewage, and Nationwide charged and collected a premium based on the fact that my client dealt with sewage.
On Tuesday, the Seminole County Circuit Court heard cross motions for summary judgment and ruled that the Policy does indeed cover this loss. The Court held that the policy as modified by the application provided the insured with liability coverage for losses dealing with sewage.