The owned property exclusion: Rules of contract interpretation versus public policy

Abstract

The owned property exclusion in most comprehensive general liability policies limits coverage for property damage to injury to property other than property owned by the insured. Insureds faced with environmental contamination on their own property have attempted to obtain coverage for the remediation of their property by arguing that the owned property exclusion does not bar coverage because the insured's on‐site remediation is necessary to prevent imminent damage to a third party's property or future damage to a thirdparty's property. In addressing the owned property exclusion, courts have reached different conclusions. While the analyses of the cases that have addressed the issue are varied, this article examines two recent cases that address the more common approaches to the meaning and effect of the owned property exclusion. In a decision from the Supreme Court of Delaware, the court focused on traditional principles of contract interpretation and applied the exclusion as written. In a case decided by Maryland's intermediate appellate court, the analysis focused largely on public policy as a justification for finding that the exclusion did not apply. This article compares and contrasts the two analyses.