The language of a policyholder’s insurance policy determines whether all those premiums will translate into dollars paid after a loss.  For the most part, it is the insurance company that controls that language.  Therefore, it is very important that policyholders pay attention to that language at the time they buy insurance to be sure that the language supports coverage for the most likely claims that may arise.  Even the most diligent policyholder cannot foresee all possible claims, and those instances may lead to a dispute with the insurance company.

On November 19, 2019, Larkin Hoffman’s insurance coverage lawyers were successful in getting the Wisconsin Court of Appeals to reverse a Circuit Court decision that had dismissed Superior Water Light and Power Company’s insurance coverage claim for the environmental clean-up of a manufactured gas plant.  Superior Water Light & Power v. Certain Underwriters at Lloyds, No. 2018AP1926 (Wisc. Ct. App. Nov. 19, 2019).  Back before natural gas became the standard, manufactured gas was created from coal and other petroleum products to heat homes, for lighting and other purposes.  MGPs or manufactured gas plants existed around the country to produce this gas.  The SWLP case involved Wisconsin’s first interpretation of certain terms of the Lloyds Blanket Form Excess Liability Policy.

The SWLP site at issue produced carbureted water gas from 1889 until 1904, and then stored manufactured gas at the facility until 1959.  In 2001 the Wisconsin DNR claimed that SWLP was potentially liable for contamination at the site.  SWLP notified Lloyds, who provided Blanket Excess Liability Insurance to SWLP from the 1940s into the 1980s.  Lloyds acknowledged receipt of notice and reserved its rights.

Once the nature of the cleanup became clearer, SWLP brought an action against Lloyds seeking payment under Lloyds’ policies, which provided coverage for all sums as a result of any occurrence.  “Occurrence,” in turn, was defined as “one happening or series of happenings arising out of or caused by one event taking place during the term of this contract.”  The parties agreed that “one happening or series of happenings” included the third-party groundwater contamination that SWLP was required to address.  At issue was the interpretation of “one event.”  Lloyds argued that “one event” had to be the original release or spill of contaminates at the site.  Because Lloyds didn’t start issuing policies until the 1940s, Lloyds argued the “one event” could not have taken place during its policy period.  SWLP, on the other hand, argued that the “one event” was the exposure of clean groundwater to contaminates in the soil, and that event was continuous, including during the policy period at issue.

Relying on cases from New Jersey, New Hampshire, New York and Massachusetts, the Circuit Court held that “one event” required a new release or spill during the policy period to trigger coverage.  The Wisconsin Court of Appeals disagreed.  Relying on Wisconsin law, the court found that either parties’ interpretation of the term “one event” was reasonable, and therefore the term was ambiguous.  The court cited to SECURA Insurance v. Lyme St. Croix Forest Co., LLC, 918 N.W.2d 885 (Wisc. 2018), interpreting a different policy’s use of the term “one event” to include both a three-day fire and the original spark that caused the fire.  Based on this decision, the Court of Appeals held that “both the initial spill or release of contaminates, as well as the influx of new groundwater into the Site’s subsoil” would be an “event” triggering the policy.  The court recognized that SWLP’s resort to a recognized dictionary definition of “event” as “something that happens” was appropriate to discern the plain meaning of undefined words in an insurance policy.

The court was not persuaded by Lloyd’s assertion that SWLP was conflating the cause of the damage with the damage itself.  The court held that the mere presence of contaminates in SWLP’s soil would not trigger coverage.  Third-party property had to be impacted.  The court recognized that the relevant event was when third-party property, here groundwater, contacted chemical substances in SWLP’s subsoil, not the initial spill which may have never impacted groundwater (i.e. it could have been cleaned up prior to contact).

This is an important decision distinguishing Wisconsin law from decisions in New Jersey (Public Serv. Elec. and Gas. Co. v. Certain Underwriters at Lloyd’s of London, 1994 U.S. Dist. LEXIS 21072 (D.N.J. 1994), New Hampshire (Energy North Natural Gas, Inc. v. Associated Electric & Gas Ins. Services, Ltd., 1999 U.S. Distr. LEXIS 23307 (D.N.H. 1999), New York, (Long  Island Lighting Co. v. Allianz Underwriter, Ins. Co., 301 A.D.2d 23, 749 N.Y.S.2d 448 (1st Dept. 2002), and Massachusetts (One Beacon Am. Ins. Co. v. Narragansett, 87 Mass. App. Ct. 1126 (Mass. App. Ct. 2015).

Larkin Hoffman’s insurance coverage department can help you and your business assess its insurance and maximize coverage.  You can contact Chris Yetka at