Property damage

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On March 7, 2025, the California Department of Insurance issued Bulletin 2025-7, which provides crucial guidance on the handling of smoke damage claims for properties affected by the Los Angeles wildfires. This bulletin clarifies the Department’s position on insurance coverage for smoke damage and outlines the expectations for insurers in processing these claims. The bulletin…

Introduction

Judge Corley’s (N.D. Cal.) January 10, 2025 decision in Bottega, LLC v. National Surety Corporation provides guidance for commercial policyholders who have closed down their businesses due to wildfires, smoke, ash and soot that is especially timely given the ongoing wildfires in Southern California. The decision highlights the complexities of business interruption insurance claims, distinguishes…

At the end of January, the Rhode Island Supreme Court concluded that a pollution exclusion contained in a general liability policy did not bar coverage for a suit alleging that the policyholder’s negligence caused 170 gallons of home heating oil to leak into its customer’s basement resulting in property damage.  Regan Heating & Air Conditioning v. Arbella Protection Insurance Co., No. 2020-170-Appeal.

  • First, the court confirmed that context matters. Just because a substance can be a “pollutant” in some contexts does not mean that all losses alleging damage caused by that substance are excluded “pollution” claims. 
  • Second, the court recognized that a split in judicial opinions as to the meaning of a disputed policy term is “proof positive” of ambiguity – or, at a minimum, supports a finding that the policy is susceptible to more than one reasonable interpretation.

The Regan ruling is consistent with well-settled principles of policy interpretation. The onus has always been on insurance companies, who hold the drafting pen and the bargaining power, to use clear and unequivocal language to describe what is (or is not) covered. In the absence of clear language, or where reasonable minds could differ – as was the case in Regan – the policy is ambiguous and must be interpreted in favor of coverage.Continue Reading Rhode Island Supreme Court recognizes that context and case law matter in interpreting policy exclusions