Maryland Appeals Court Rules that CGL Policy Did Not Provide Liability Coverage for Mis-Delivered Home Heating Oil

An appellate court in Maryland has ruled that a commercial general liability (“CGL”) insurance policy issued to a company in the home heating oil business did not provide liability coverage for a claim for property damage resulting from a mis-delivery of home heating oil by a fuel truck driver.

The Case

The insured sought coverage under a CGL policy for a property damage claim brought by customers who alleged that it had pumped fuel oil into their finished basement instead of into a fuel tank.

The trial court ruled that the CGL policy did not cover the claim, and the insured appealed.

The Appellate Court’s Decision

The appellate court affirmed.

In its decision, the appellate court explained that the CGL policy covered property damage in those situations when an accident causing property damage occurred after a delivery had been completed or abandoned. Here, however, the property damage had begun the moment the insured’s driver started pumping oil into the basement. The full extent of the property damage manifested itself over hours, days, and weeks, but it had “occur[red]” when the oil was discharged into the basement, soaking into the floor and walls and escaping down the floor drain into the soil beneath the basement slabs, the appellate court stated.

Therefore, the appellate court found, the property damage all arose from the use of an auto and was excluded from coverage under the CGL policy for that reason. A “mis-delivery” endorsement in the CGL policy did not provide coverage for the property damage because the property damage had occurred during the mis-delivery, not after it had been completed or abandoned, the appellate court concluded.

The case is Griffith Energy Services, Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pa., No. 923 (Md. Ct. App. Aug. 25, 2015).