Insurers Told to Pay Costs of Toxic Cleanup

A toxic polluter’s insurance companies must pay the costs of a cleanup ordered by the government, a state appeal court has ruled in a precedent-setting case.

The 3-0 decision by the 1st District Court of Appeal, released Thursday, could require more than 50 insurance companies to pay costs estimated at $100 million by Aerojet General Corp. for cleaning up chemical solvents that leaked into ground water near its Sacramento plant.

The ruling was the first by a state appellate court to decide whether a polluter or the insurers who provide coverage for property damage should pay the high costs of removing hazardous substances from the environment.

Similar cases are pending in several courts in California. Richard Seabolt, a lawyer for Lloyd’s of London underwriters who were among the defendants, said he expects an appeal to the state Supreme Court.

The appeal court, in an opinion by Justice Zerne Haning, said insurance coverage of cleanup costs was supported by a reasonable interpretation of the language of the insurance policy, and also by “sound public policy.”