Auto-Owners Insurance Denies Coverage in Stormwater Lawsuit

News Summary

Auto-Owners Insurance Company has filed a legal complaint denying coverage in a lawsuit concerning stormwater runoff from the Stone Haven construction site in Winder, Georgia. Local residents claim construction activities have polluted their properties and water bodies. The insurer argues that claims are excluded under the policy due to late notification and pollution exclusions. The case highlights the importance of understanding insurance policies and timely incident reporting amidst ongoing legal proceedings.

Winder, Georgia – Auto-Owners Insurance Company has initiated a legal complaint denying coverage in a significant lawsuit tied to stormwater runoff at a construction site in Georgia. The case focuses on the Stone Haven development, a 70-acre project in Winder, where local residents allege that construction activities have polluted their properties and surrounding water bodies.

The lawsuit was filed on August 5, 2025, in the US District Court for the Northern District of Georgia. It stems from grievances by neighbors Jeff Lee Martin and Sara Brooke Johnson, who claim that construction operations led to substantial stormwater runoff containing excessive sediment that adversely impacted Sarah’s Creek from 2022 through 2024. The plaintiffs assert that the runoff caused sediment buildup, streambank erosion, and persistent discoloration of the water, despite the implementation of erosion control measures.

Martin and Johnson initially sought legal recourse on July 31, 2024, by filing in the Barrow County Superior Court. They are seeking damages, punitive damages, and an injunction to prevent further runoff incidents, demanding a settlement reportedly in the seven-figure range.

Auto-Owners Insurance had provided Barrow Investment Group of Georgia, LLC, with a commercial general liability policy that includes coverage of up to $1 million per occurrence and $2 million in aggregate. This policy was effective from August 2, 2022, and renewed until August 2, 2024. In its recent complaint, Auto-Owners seeks a court ruling showing it has no duty to defend or indemnify Barrow in the current lawsuit.

The insurer argues that Barrow did not timely notify them of the runoff issues, with notification occurring only after the legal action commenced in August 2024. The first runoff event reportedly occurred in August 2022. The insurance policy stipulates that notice of any incident should be given “as soon as practicable,” along with forwarding any legal documents promptly. Auto-Owners contends this delay hindered their ability to investigate or possibly resolve the matter before it escalated into litigation.

In addition, Auto-Owners invokes pollution exclusions specified within the policy, which broadly identifies pollutants to encompass sediment, soil particles, and silt. The insurer asserts that the claims pertain to damages caused by the discharge of such pollutants, thus resulting in exclusion from coverage under the terms of the policy.

Furthermore, Auto-Owners argues that the property damage resulting from the runoff does not constitute an “occurrence” under the policy, which is designed to cover accidents rather than intentional acts. The insurer indicates that clearing, grading, and excavating activities conducted by Barrow were deliberate and foreseeable, especially after the company had been made aware of runoff concerns as early as January 2023.

Notably, Auto-Owners claims that the policy does not cover injunctive relief or legal fees, focusing instead exclusively on damages related to property loss. The complaint also references the “known loss doctrine,” suggesting that Barrow was aware of the alleged damage prior to the renewal of its insurance policy in August 2023, which they argue may disqualify coverage.

At this stage, the case is still in its early phases, with the validity of all claims yet to be examined by the court. This situation underscores the significance of understanding insurance policy language, the necessity of timely reporting of incidents, and the potential implications for property owners involved in disputes regarding insurance coverage.

Deeper Dive: News & Info About This Topic

• Insurance Business America: Auto-Owners challenges coverage in Georgia stormwater lawsuit
• Wikipedia: Stormwater
• Insurance Business America: Auto-Owners Insurance defends policies
• Google Search: construction liability insurance
• Insurance Business America: Pollution exclusions and their impact on insurance
• Google Scholar: water pollution lawsuits
• Insurance Business America: Understanding the known loss doctrine in insurance coverage
• Encyclopedia Britannica: Environmental Law