Truck pollution liability: when a spill is covered and when it is yours

Your auto policy covers bodily injury, property damage and certain pollution cleanup costs caused by an accident. Then it takes a lot of pollution away.

On the ISO Motor Carrier Coverage Form (CA 00 20), the pollution exclusion removes injury or damage arising from the discharge or release of pollutants:

• that are, or are contained in, property being transported or towed by, handled for movement into, onto or from, the covered auto, or otherwise in the course of transit by or on behalf of the insured, or stored, disposed of, treated or processed in or on the covered auto;
• before the pollutants are moved from the place where you accepted them for loading; or
• after they are moved off the covered auto to the place where they are finally delivered, disposed of or abandoned.

The form also covers "covered pollution cost or expense," meaning cleanup and response costs demanded by a government or required by statute, but only if there is also covered bodily injury or property damage from the same accident.

So in plain terms: if your load is a pollutant and it gets out, the basic auto policy is not built to pay for it. The form defines pollutants broadly as any solid, liquid, gaseous or thermal irritant or contaminant, so diesel, crude, chemicals and fertilizer all qualify.

Two exceptions keep the basic form from being useless for ordinary truck accidents.

The truck's own fluids. The cargo part of the exclusion does not apply to fuels, lubricants, fluids, exhaust gases or similar pollutants needed for or resulting from the normal functioning of the covered auto, if they escape directly from a part designed by its manufacturer to hold them. A punctured fuel tank or a cracked oil pan after a wreck is the classic example. The exception does not apply to pollution from operating certain equipment mounted on the truck.

Upset or overturn away from your premises. The before-loading and after-delivery parts of the exclusion do not apply to accidents away from premises you own or rent involving pollutants not in or on a covered auto, if the pollutants or their container are upset, overturned or damaged because of the maintenance or use of the covered auto and that causes the release. If your truck backs into a customer's fuel tank away from your yard, this exception may respond.

These exceptions are narrow. They are not a substitute for cargo pollution coverage if you haul fuel, chemicals or anything else that is a pollutant.

ISO's CA 99 48 (Pollution Liability: Broadened Coverage for Covered Autos, for the business auto and motor carrier forms) is the standard fix for haulers of pollutants. It changes the exclusion so that the transported-pollutant part applies only to liability assumed under a contract, removes the care, custody or control exclusion for that restored coverage, and redefines covered pollution cost or expense so that cleanup demands and government suits are covered for pollutants in transit.

It still does not cover pollutants before they are moved onto the auto or after they are moved off to final delivery, except for an off-premises accident that upsets or overturns the container.

Who usually needs it: fuel and propane haulers, chemical and fertilizer tankers, waste haulers, and anyone hauling placarded hazardous materials. See hazmat trucking insurance, tanker truck insurance and oilfield trucking insurance.

For losses during loading and unloading at a customer's facility, or at your own yard, ask about a separate transportation pollution or contractors pollution policy. Those are insurer-specific forms; read the coverage triggers and the definition of transit.

Federal rules define public liability to include liability for environmental restoration, and define environmental restoration as restitution for the loss, damage or destruction of natural resources arising from the accidental discharge or release of any commodity transported by a motor carrier (49 CFR 387.5). The MCS-90 obligates the insurer to pay final judgments for public liability, up to the required amount, even when the policy would not otherwise cover the claim.

That sounds like pollution coverage. It is not, for you. IRMI explains that the MCS-90 does not actually provide insurance except on a reimbursement basis. If your policy excludes the spill and the insurer pays under the MCS-90, you owe the insurer that money. IRMI also notes that CA 99 48 modifies the auto pollution exclusion without deleting it.

The federal minimums are also higher for many pollutants. Under 49 CFR 387.9, for-hire carriers hauling oil or most hazardous materials in vehicles of 10,001 pounds or more need $1,000,000, and certain bulk hazardous materials require $5,000,000. TxDMV's intrastate minimums are $1,000,000 for oil and certain hazardous materials and $5,000,000 for placarded hazardous materials. See FMCSA truck insurance minimums.

Texas has its own reporting rules for spills. Under 30 TAC 327.3, the responsible person must report a reportable discharge or spill to the state as soon as possible but not later than 24 hours after discovery, through the State Emergency Response Center, the TCEQ regional office during business hours, or the agency's 24-hour spill line. Under 30 TAC 327.4, the reportable quantity for petroleum product spilled onto land is 25 gallons, and 210 gallons (five barrels) for crude oil onto land; for either, a spill directly into state waters is reportable at a quantity sufficient to create a sheen. A single ruptured saddle tank can exceed that.

Reporting to the state is not notice to your insurer. Your policy has its own notice conditions, and pollution coverage is often where insurers enforce them most strictly. Report to both, in writing, and keep the confirmation. Have an environmental attorney advise on your reporting duties after a significant release.