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Georgia refuses to adopt continuous trigger: CGL not limited to insuring injury taking place during the policy period.

* When an insured has a continuous loss where pollutants leak into the soils and cause damage over a long period of time, it can be held for the damages that result, as part of a continuous loss, over a long period of time. In Columbia Casualty Company v. Plantation Pipe Line Company, Court of Appeals of Georgia,--S.E.2d--, 2016 WL 4548664 (August 31, 2016), Plantation Pipe Line Company (Plantation) sued five of its excess liability insurers, including Columbia Casualty Company (Columbia), seeking relief including a declaratory judgment as to each insurer's respective share of Plantations losses arising from a pipeline leak. The trial court granted Plantation's motion and denied Columbia's cross-motion.

Columbia appealed both rulings, contending that the trial court erred in allocating all of Plantation's losses to the policies that were in place at the time of the fuel leak, rather than allocating Plantation's losses pro rata among the multiple, successive policies that were issued to Plantation over the thirty-year period during which the environmental contamination continued to accrue.


The record shows the following relevant undisputed facts: On April 2, 1976, Plantation employees discovered that turbine fuel had leaked from an underground Plantation pipeline located in Cabarrus County, North Carolina. Within 24 hours, Plantation repaired the pipeline and cleaned up the leak. Without resorting to insurance, it compensated the only affected landowner $50. More than thirty years later, on April 3, 2007, one of Plantation's workers found contaminated soil during maintenance of Plantations pipeline, and the contamination was traced to the 1976 leak.

Plantation filed this action in 2012, seeking recovery for amounts it has spent to settle third party claims, amounts it has expended for remediation, and projected costs to complete remediation. A Plantation executive estimates that Plantation's costs through 2030 will total between $5.6 million and $8.6 million.

The record shows that at the time the initial fuel leak occurred in Cabarrus County in April 1976, Plantation had $1,000,000 in primary coverage under a comprehensive general liability ("CGL") policy issued by American Reinsurance Company (subject to a self-insured retention of $100,000), and had excess coverage, including $1 million under an umbrella policy issued by Lexington Insurance Company. In late 1975, Columbia issued an "Excess Third Party Liability Policy" to Plantation for the period of January 24, 1976 through November 30, 1976. Unless otherwise provided, the Columbia excess policy incorporated the terms of the Lexington umbrella policy. In the Insuring Agreements in the Lexington umbrella policy, Lexington agreed: "[t]o pay on behalf of [Plantation] the ultimate net loss in excess of the underlying insurance [(the self-insured retention and the primary CGL policy issued by American)], which [Plantation] shall become legally obligated to pay as damages by reason of the liability imposed upon [Plantation] by law... because of...[p]roperty [d]amage...caused by or arising out of an occurrence."

In the Insuring Agreements in the Columbia excess policy, Columbia agreed to indemnify Plantation for loss in excess of the limits of liability of the Lexington policy, which was the "underlying insurance." The Insuring Agreements in the Columbia policy further provide as follows: "This policy applies to injury or destruction taking place during this policy period, provided that when the immediate underlying policy insures occurrences taking place during its policy period, instead of injury or destruction taking place during its policy period, then this policy likewise applies to occurrences taking place during this policy period[,] and 'occurrences' is substituted for 'injury or destruction' in Part III of this policy [regarding reduction of the aggregate]."


Columbia contends that it is entitled to judgment as a matter of law that the policy it issued to Plantation is not triggered by the claims at issue in this case.

Columbia points to evidence that the environmental contamination caused by the occurrence at issue, the April 1976 fuel leak, continued to unfold (and even to this day continues to unfold), as the quantity of pollutant that Plantation failed to clean up in 1976 migrated downward through the soil, reached flowing groundwater and formed a plume in the water table, where it contaminated clean water that made contact with the contaminated water, and that such contamination of previously clean water will continue to occur until the remediation process is complete.

Columbia argues that this is typical of environmental contamination cases because environmental contamination by its nature occurs over time, gradually or progressively causing personal injury or property damage, which may be unknown to the injured parties for years.

Columbia points to evidence that from 1976 through 2005 several different insurers issued liability policies to Plantation. Over time, the overall coverage profile varied, as the limits of the different policies, the scheme of the different layers of coverage (self-insured retention, primary coverage, umbrella coverage, excess coverage, etc.), and areas of overlapping coverage all varied from year to year.

Columbia argues that it is typical of environmental contamination cases that, because of the progressive nature of environmental contamination, the resulting personal injury or property damage overlaps multiple successive insurance policy periods of the insured's liability coverage. And Columbia contends that in this case multiple successive insurance policies were potentially triggered during later policy periods by the unfolding environmental damage that originated with the 1976 pipeline leak and that Plantation's losses from remediation costs and third-party claims should be allocated among those policies by the Court.

Columbia urges the Court to adopt the so-called "continuous trigger theory." Columbia argues that Plantation's total financial loss from the latent, continuous, and progressive property damage that took place over three decades should be allocated pro rata among each successive policy period from 1976 to 2007, when the contamination was discovered and became "manifest." When this is done, Columbia argues, the amount of loss properly allocated to the policy period of the policy it issued to Plantation is far less than the $2 million attachment point for the excess coverage it provides. As a result, Columbia contends, its policy is not triggered as a matter of law under the continuous trigger theory. Moreover, Columbia argues, the result would be the same if the Court were to adopt in the alternative the so-called "injury in fact" trigger theory.

Even if this Court were inclined to adopt the continuous trigger theory, application of this theory is premised on the assumption that the Columbia policy contains language that limits coverage to property damage that takes place during the policy period. The insuring agreement in the Columbia policy provides that the policy applies to injury taking place during the policy period unless, instead of insuring injury taking place during the policy period, the Lexington policy insures occurrences taking place during the policy period, which it does.

In this case, then, the Columbia policy expressly "applies to occurrences taking place during [the] policy period. Columbia argues that Plantation failed to identify any evidence that more than $2 million worth of property damage occurred during the coverage period for the Columbia policy, again restating its argument that its policy was not triggered.

In addition, Columbia contends that Plantation's reliance on the so-called "known loss" doctrine is misplaced because the doctrine is not the law of Georgia and because the doctrine is inapplicable, given the fact that "Plantation judicially admitted it did not know petroleum product and contaminants remained subsurface at the Site after it repaired the leak in April, 1976."

If the insured knows or has reason to know, when it purchases a CGL policy, that there is a substantial probability that it will suffer or has already suffered a loss, the risk ceases to be contingent and becomes a probable or known loss. Where the insured has evidence of a probable loss when it purchases a CGL policy, the loss is uninsurable under that policy (unless the parties otherwise contract) because the risk of liability is no longer unknown.


The facts make clear that there was an "occurrence" during the effective dates of the Columbia policy, therefore compelling --regardless of the trigger applied--Columbia to defend and indemnify Pipeline. Of course, since the subsequent policies were triggered when the contamination continued, Pipeline learned of the continuing pollution much later, but it seems to me all policies in effect during the occurrence over the years should be compelled to pro-rate with Columbia. Perhaps, if there is an appeal to the Georgia Supreme Court, the continuous trigger will be adopted since no insurer on the risk when loss is occurring should be exonerated from coverage.


Barry Zalma, Esq., CFE, has practiced law in California for more than 42 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes.

He founded Zalma Insurance Consultants in 2001 and serves as its only consultant.

Look to National Underwriter Company for the new Zalma Insurance Claims Library, at The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide.

The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma's book "The Insurance Fraud Deskbook" available at, or 800-285-2221 which is presently available. Legal Disclaimer:

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Title Annotation:ON MY RADAR
Author:Zalma, Barry
Publication:Insurance Advocate
Date:Oct 31, 2016
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