Under New York Law, property damage is deemed to occur within the period of an occurrence-based policy, if injury-in-fact takes place during the policy period. See Continental Casualty Co. v. Rapid-American Corp., 177 A.D.2d 61 (App. Div., 1992). An insurer may only refuse to defend an action, however, where a comparison of the policy with the underlying complaint shows on its face that there is no potential for coverage. See Ruder & Finn, Inc. v. Seaboard Sur. Co., 52 N.Y.2d 663 (1981).
Pursuant to New York Navigation Law § 181(1) any person who has "discharged" petroleum shall be strictly liable, without regard to fault, for all cleanup and removal costs. A "discharge" is defined as "any intentional or unintentional action or omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of petroleum." See Navigation Law § 172(8). New York courts have held that a discharger includes any person who is in a position to halt a discharge, to affect an immediate cleanup or to prevent the discharge in the first place. See State of New York v. Montayne, 199 A.D.2d 674 (App. Div., 1993). However, New York courts have required that in order for a fuel supplier to be held liable as a discharger: (a) the discharge at issue must have first occurred during the delivery process; or (2) there are additional factors that in some fashion connect the petroleum supplier to the spill, such as when the fuel supplier sets "in motion the events which resulted in the discharge." See State of New York v. Avery-Hall Corp. et al., 279 A.D.2d 199 (App. Div., 2001).
In determining that a defendant fuel supplier set in motion the events which resulted in a discharge, the Cronin court considered factors as: (1) defendant's ownership of the on-site gasoline pumps, ducts and nozzles; (2) defendant's knowledge that the equipment had malfunctioned; (3) defendant was the sole repairer and sole provider of maintenance to the gasoline dispensing facilities; and (4) defendant's employees repaired an underground fill pip to one of the tanks. See State of New York v. Thomas J. Cronin et al., 186 Misc. 2d 809 (Sup. Ct., 2000).
As a result, where there is no allegation whatsoever in the Complaint that the discharge occurred during the delivery of fuel oil, an insurer may refuse to defend an action. An insurer has an ever stronger case to deny coverage and refuse defending an action where NYSDEC confirms that there is no evidence of overfills or negligence on the part of the fuel oil provider, and there is no evidence of any "additional factor", such as those identified by the Cronin court. In such a circumstance, a court could conclude that a Complaint contains no basis for finding the insured fuel oil supplier liable for any discharge during the policy period. Absent injury-in-fact giving rise to liability of the insured during the policy period, the policy would not be triggered as to the insured.