8.5.6 Response Costs as Damages

• Jurisdiction: Arizona

Standard CGL policies provide coverage to "pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages . . ." Significant litigation has focused on whether the remedies sought by the Environmental Protection Agency were damages that the insured was legally obligated to pay. There is a split of authority on this question. Courts rejecting coverage have adopted a traditional view of damages as meaning monetary damages and not equitable relief.^[347] Those courts that have found that clean-up costs are essentially compensatory damages for injury to property, even though the costs may be characterized as seeking equitable relief.^[348]

The current division of authority about this issue is difficult to measure...