Auto-Owners Insurance Company is looking to sidestep a high-stakes lawsuit over stormwater runoff at a Georgia construction site, citing pollution exclusions and late notice as its reasons for denying coverage.
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Filed on August 5, 2025, in the US District Court for the Northern District of Georgia, the complaint from Auto-Owners sets the stage for a legal showdown that insurance professionals will want to watch closely. At the heart of the dispute is the Stone Haven development, a 70-acre project in Winder, Georgia, that has become a flashpoint for questions about liability and environmental risk.
According to the insurer’s filing, Barrow Investment Group of Georgia, LLC, began work on the Stone Haven site in 2022. Two neighbors, Jeff Lee Martin and Sara Brooke Johnson, claim that Barrow’s construction activities led to sediment-heavy stormwater flowing into Sarah’s Creek and onto their properties during several rainstorms between 2022 and 2024. They allege the runoff caused visible sediment buildup, streambank erosion, and discolored water - damage they say has continued despite the installation of erosion controls.
Martin and Johnson filed suit in Barrow County Superior Court on July 31, 2024, seeking damages, punitive damages, and a court order to halt further runoff. Auto-Owners notes in its complaint that the plaintiffs have demanded a settlement in the seven-figure range.
Auto-Owners had issued Barrow a commercial general liability policy, with $1 million per occurrence and $2 million in aggregate coverage, effective August 2, 2022, and renewed through August 2, 2024. But the insurer is now asking the court to declare that it has no obligation to defend or indemnify Barrow in the underlying lawsuit.
The insurer’s argument hinges on several key points. First, Auto-Owners says Barrow failed to provide timely notice of the alleged runoff events or the resulting claims. According to the complaint, the insurer wasn’t notified until August 2024—after the lawsuit was filed—even though the first runoff event allegedly occurred in August 2022. The policy requires notice “as soon as practicable” and immediate forwarding of any legal papers. Auto-Owners says this delay left it unable to investigate or resolve the matter before it escalated to litigation.
Second, Auto-Owners is relying on the policy’s pollution exclusion. The policy defines “pollutants” broadly, including sediment, silt, and soil particles - the very materials at issue in the case. The insurer contends that because the alleged damage stems from the discharge of these substances, the policy’s pollution exclusion bars coverage.
Auto-Owners also argues that the property damage described in the lawsuit does not qualify as an “occurrence” under the policy, which covers accidents but not intentional acts. The complaint asserts that Barrow’s actions - clearing, grading, and excavating - were deliberate, not accidental. The insurer further claims that the “expected or intended injury” exclusion applies, since the runoff was a foreseeable result of Barrow’s work, especially after the company was notified of the problem in January 2023.
The complaint points out that the policy does not cover injunctive relief or attorneys’ fees, only damages for property loss. Auto-Owners also invokes the known loss doctrine, arguing that Barrow was aware of the alleged property damage before renewing its policy in August 2023, which would bar coverage under the renewal.
It’s important to remember that these are all claims made by Auto-Owners in its complaint. The court has not yet weighed in, and Barrow has not yet responded. The case is in its earliest stages, and the facts remain to be tested in court.
For insurance professionals, this case is a timely reminder of how policy language, prompt reporting, and project oversight can shape the outcome of coverage disputes. The decision could have far-reaching consequences for how insurers and developers handle runoff and pollution claims in the years ahead.
