Indiana Farm Bureau Insurance Co. v. Harleysville Insurance Co.
965 N.E.2d 62
Ind. Ct. App.2012Background
- Koors Amoco service station in Warsaw, Indiana disclosed contamination and sought remediation; IDEM action timelines span 1998 onward.
- Heartland Environmental Associates conducted initial soil testing in 1998 showing BTEX contamination; IDEM later requested additional site assessments in 2004 and 2005 without indicating actionable remediation.
- Koors tendered defense and indemnity to Farm Bureau and Harleysville in December 2008; Harleysville had issued six policies to Koors between 1998 and 2004.
- Policy terms: Harleysville covered garage operations with a defense duty, but exposure constrained by the Pollution Exclusion and knowability/notice clauses; Farm Bureau sought contribution for IDEM-related costs.
- District court granted Harleysville summary judgment, denying Farm Bureau’s; Farm Bureau appeals arguing (i) known loss doctrine does not bar coverage, (ii) Koors’s notice was timely or not prejudicial, (iii) pollution exclusion does not bar coverage.
- Court reverses and remands for further proceedings consistent with opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Known loss doctrine applicability | Koors had no actual pre-policy loss knowledge. | Koors knew or should have known of the loss; doctrine bars coverage. | Issue for jury; known loss not established as a matter of law. |
| Timely notice of loss | Koors’s knowledge disputed; notice could be unreasonable delay. | Advantageous to treat 1998/2004-2005 information as actual knowledge; notice was late as a matter of law. | Question of reasonableness and prejudice for jury. |
| Pollution exclusion interpretation | Gasoline may be covered if not a pollutant under policy. | Gasoline is a pollutant excluded by policy; exclusion applies. | Pollution exclusion disputed; need further proceedings on coverage. |
Key Cases Cited
- General Housewares Corp. v. National Surety Corp., 741 N.E.2d 408 (Ind.Ct.App.2000) (known loss doctrine—fortuity requirement and pre-policy knowledge)
- Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill. 2d 90, 607 N.E.2d 1204 (Ill.1992) (concept of known loss across jurisdictions)
- Kiger v. Am. States Ins. Co., 662 N.E.2d 945 (Ind.1996) (pollution exclusion interpretation; gasoline not plainly a pollutant; strict construction against insurer)
- Miller v. Dilts, 463 N.E.2d 257 (Ind.1984) (notice requirements and prejudice when notice is late)
- Shelter Mut. Ins. Co. v. Barron, 615 N.E.2d 503 (Ind.Ct.App.1993) (notice as a condition precedent to coverage; prejudice analysis)
- London Guarantee & Accident Co. v. Siwy, 66 N.E. 481 (Ind.1903) (notice provisions; material duty to notify)
- Askren Hub States Pest Control Services, Inc. v. Zurich Ins. Co., 721 N.E.2d 270 (Ind.Ct.App.1999) (prejudice and notice delay considerations)