This is the first of a series of blog entries where I will examine the relationship between pollutants and first-party property insurance claims. I will be focusing on the different circumstances where coverage disputes have arisen as a result of the pollutant exclusion found in many of today’s homeowners and commercial property insurance policies.
Like many people, the first thing that initially came to mind when I thought of pollutants and property insurance was a scenario where a home has been damaged by toxic waste produced by a neighboring factory. But as this blog series will illustrate, there are cases where other types of losses – including property damage caused by pesticides, fires, building materials, oil leaks, sewage, dust, debris, or even cow excrement – have been denied by insurance carriers under a policy’s pollutant exclusion.
Though one may not normally associate these types of losses with pollutants, insurers may nevertheless attempt to deny coverage based on the broad language used in the exclusion. For example, a typical pollutant exclusion clause1 provides:
We insure against risk of direct loss to property described in Coverage A and B only if that loss is a physical loss to property. We do not insure, however, for loss:
2. Caused by:
(5) Discharge, dispersal, seepage, migration, release or escape of pollutants unless the discharge, dispersal, seepage, migration, release or escape is itself caused by a Peril Insured Against under Coverage C of this policy. Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
As one could probably imagine, what is (or is not) a pollutant is a question frequently litigated in first-party insurance claims. Court’s throughout the United States have grappled with this issue over the years and, in some cases, arrived at different conclusions. Make sure to read Part 2 of Pollutant Exclusions in Property Insurance Policies to learn more.
1 Insurance Services Office (“ISO”) 1991 Form, HO 03 04 91.