Court Rules Insurance Carrier Does Not Need to Cover $5 Million Faulty Gas Tank Deal

WWHGD represented Central Mutual Insurance Company in an insurance coverage dispute concerning whether insurance policies issued by Central provide coverage for a consent judgment obtained by the plaintiff against Central’s insured for damages allegedly caused by defective underground storage tanks manufactured by the insured.  The plaintiff alleged that the inner wall of the storage tanks began to fail shortly after manufacture and continued to deteriorate after they were installed at numerous gas stations owned by the plaintiff.  The plaintiff sought damages for the costs it allegedly incurred to investigate the problems, repair or replace the tanks, lost profits, and other damage.  WWHGD filed a motion for judgment on the pleadings in which it argued that the consent judgment did not include any covered “property damage” as defined by the Central policies because the damage was confined to the tanks rather than other, third-party property.  WWHGD also argued that even if “property damage” were alleged, an exclusion for damage caused by the insured’s completed products barred coverage.  The Court granted Central’s motion and held that Central had no duty to defend or indemnify the insured.  Consequently, Central was not liable for the consent judgment. 

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