An Old Republic Insurance Group unit that issued an umbrella policy to an oil and gas company in Montana is not required to drop and provide pollution coverage, a federal appeals court said on Monday, confirming a lower court decision. Montana-based J. Burns Brown Operating Co. sued its umbrella insurance company, Old Republic Unit Bitco General Insurance Corp., in U.S. District Court in Great Falls, Montana, for costs incurred after one of its wells discharged oil and related contaminants into a reservoir. , according to the decision of the 9th American Circuit Court of Appeals in San Francisco in Bitco General Insurance Corp. against J. Burns Brown Operating Co.
The district court ruled in favor of Bitco and was upheld by a unanimous panel of three judges for appeal.
The decision states that J. Burns Brown's Bitco policy excludes coverage for pollution-related property damage with one exception ̵
"So even if J. Burns & # 39; underlying insurance & # 39; covers part of the company's reorganization costs, does not do so at the necessary limits. Consequently, the strict exemption from the exclusion of pollutants does not apply, and the umbrella policy prevents coverage, ”the decision states.
The Court of Appeal stated that it did not agree with J. Burns Brown's position that the policy was ambiguous. "Contrary to the company's claim, a reasonable policyholder would understand the need to have $ 1 million in pollution coverage," the decision said.
Lawyers did not respond to requests for comment.