On August 29, 2005, the California Supreme Court issued an opinion, Powerine Oil Co., Inc. v. Superior Court, 2005 DJDAR 10545 (Cal. Aug. 29, 2005) (“Powerine II ”), that opens the door for excess/umbrella liability policyholders to recover environmental cleanup costs ordered by an administrative agency. The Court held that a literal reading of the excess/umbrella insurance clause at issue extends indemnity coverage to the “expenses” of responding to environmental cleanup orders imposed by administrative agencies ( Id., 10553). This decision is significant because the Court had previously held in Certain Underwriters at Lloyd’s of London v. Superior Court, 24 Cal. 4th 945 (2001) (“Powerine I ”), that such administrative costs were not covered under standard comprehensive general liability (“CGL”) policies.

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