COA affirms policy provides property damage coverage for abandoned sand

March 11, 2015

The Indiana Court of Appeals affirmed its original decision Wednesday that an insurance policy covers property damage caused by 100,000 tons of foundry sand on property owned by FLM LLC.

International Recycling Inc. went out of business and abandoned the foundry sand on FLM’s property after Chrysler stopped paying IRI for its sand disposal services. The COA ruled last year that the commercial general liability policy issued by The Cincinnati Insurance Co. to IRI covered the property damage.

In FLM, LLC v. The Cincinnati Insurance Company, et al., 49A02-1401-PL-17, Cincinnati sought rehearing, arguing that the COA also should have addressed whether the property damage was expected or intended by IRI and therefore subject to a coverage exclusion under the policy.

The COA concluded in its 2014 decision that the contamination of FLM’s property by the sand was an “accident” and therefore an “occurrence” under the policy. FLM also noted that Chrysler was IRI’s sole source of revenue and that the company did not make a business decision or intentionally or deliberately abandon the foundry sand. It was only when IRI was unexpectedly forced out of business by Chrysler that the injuries occurred.

The appeals court found FLM’s argument persuasive. It concluded as a matter of law that the property damage was not expected or intended by IRI and thus the exclusion does not apply. The original opinion is affirmed in all respects.  



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