Pollution

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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

Faced with mounting claims for insurance coverage as a result of the novel coronavirus (COVID-19) outbreak, commercial insurers are likely to search for any policy provision that they think will enable them to avoid paying virus-related claims.  One provision that insurers ultimately may invoke in an attempt to deny such claims is the so-called “pollution exclusion” – an exclusion that can be found in both commercial general liability (CGL) insurance policies and property insurance policies.  Policyholders should anticipate such an argument and should not walk away from insurance claims just because of it.  Although the exclusion is often broadly worded, there is generally good reason not to read it to preclude coverage for third-party claims and/or first-party losses involving viruses, including COVID-19.

While the exact language of the pollution exclusion may differ from one policy to another, it typically provides that there is no insurance for “bodily injury” and/or “property damage” that “would not have occurred in whole or in part but for the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of ‘pollutants’ at any time.”  Again, while its precise definition can vary among policies, “pollutant” is typically defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.”Continue Reading Pollution exclusion should not preclude coverage for virus-related claims

Last week, the Wisconsin Supreme Court issued two opinions in which it held that pollution exclusions barred coverage for third-party claims resulting from alleged contamination of water due to the seepage of cow manure and septage, respectively. As addressed in Chief Justice Shirley S. Abrahamson’s dissents to the two decisions, the majority’s opinions in both cases – Wilson Mutual Insurance Co. v. Falk, Nos. 2013AP691, 2013AP776, 2014 WL 7375656 (Wis. Dec. 30, 2014), and Preisler v. General Casualty Insurance Co., No. 2012AP2521, 2014 WL 7373070 (Wis. Dec. 30, 2014) – were faulty for a number of reasons.
Continue Reading Wisconsin Supreme Court’s misapplication of the pollution exclusion and disregard for policyholders’ business and purpose in purchasing insurance

The Ebola crisis has raised numerous issues worldwide. Many of the concerns sparked by the crisis – particularly in the insurance coverage context – are not unique to that disease, however. For example, coverage concerns relating to Ebola-related claims would be similar to those for many other disease-related claims. Many different types of insurance policies, including general liability policies, could be implicated by such claims.
Continue Reading General Liability Insurance and Disease-Related Claims