The Kentucky 22nd Circuit Court of Appeals ruled that Erie Insurance Exchange is not required to defend or indemnify Lane Allen Food Mart, a gas station, in a pollution lawsuit stemming from leaks from its underground storage tanks. The court found that the pollution exclusion clause in Erie’s policy was clear and not ambiguous, rejecting claims that gasoline was a product, not a pollutant when leaked. Opponents of Erie argued that the gasoline leak had contaminated a neighboring property’s water source, but the court determined that the exclusion applied since it involved significant environmental damage. The ruling highlights the interpretive challenges surrounding pollution exclusions in insurance policies.
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