Casey's General Store had several gas station islands and was on property owned by CML Enterprises. It was insured under a CGL policy from Federated Mutual Insurance Company. The CGL had policy effective dates of March 5, 1990 to September 5, 1990 and it included an option for coverage against certain types of pollution liability. The pollution coverage was also effective March 5, 1990.

CML bought the property in '78 and there were numerous incidents between 1978 and 1990 which involved petroleum spills including tanker overfills and "drive-offs." In June of 1990, testing discovered that the site was contaminated by gas. In July 1990, a car hit a gas pump, releasing nearly five gallons of gas onto the property. After CML Enterprises filed a claim in 1991, a leak in the underground tank was discovered. Federated denied the claim, asserting that the loss was initially caused by an incident that occurred prior to March 5, 1990. After the denial by Federated, CML sought relief from the state's Underground Storage Tank Financial Assistance Board. The Board paid for the costs to clean up the contaminated site and then looked for reimbursement from Federated since, as a condition of getting assistance from the UST Financial Assistance Board, CML had to assign its policy rights to the Board.

The Board requested Federated to reimburse it for the clean-up costs and to provide coverage for remediation of the site (to repair the damage and make the site usable again). Federated denied the request for coverage from the Board. The Board then filed for a declaratory judgment that the insurer owed coverage for clean-up and remediation. Federal filed two cross-motions and, while the one claiming that the Board acting improperly and outside its authority was denied, its motion that the coverage was excluded was granted. The Board appealed the decision and also asserted that the insurer should be estopped from use of the exclusion because it chose not to inspect the property before issuing the policy.

The higher court reviewed the contract language and held the opinion that the contract's exclusion of losses which were contributed to or caused by events occurring before March 5, 1990 was unambiguous. Although some pollution-related losses occurred after the policy period, this did not change the effect of the exclusion. Further, the clarity of the applicable effective date made it unnecessary for the insurer to physically inspect the property since the policy language clearly controlled its exposure. The court affirmed the lower court's decision in favor of Federated Insurance.

Iowa Comprehensive Petroleum Underground Storage Tank Fund Board, Appellant v. Federated Mutual Insurance company, Appellee. IowaSCt. No. 132/97-1923. Filed July 8, 1999. Affirmed. CCH 1999 Fire and Casualty Cases, Paragraph 7563.