In my last blog post, “Pollutant” Exclusions in Property Insurance Policies, Part 1, I mentioned how a policy’s "pollutant" exclusion may be broader than one might think. In this post I will address the first question that logically comes to mind – what is a "pollutant"?
A good starting point is to look at the insurance policy and determine if it defines the term. As I noted in Part I of this series, a typical policy defines "pollutants" as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste." However, it is crucial to read the insurance policy at issue carefully before jumping to any conclusions. The "pollutant" exclusion’s language often varies between insurance carriers and the type of coverage being provided (for example, commercial property versus homeowners, or "all-risk" versus "named-peril" policies). Even subtle distinctions can make all the difference in determining whether the exclusion applies.
For example, I came across a case in Wisconsin, Guenther v. City of Onalaska,1 where a commercial policy’s "pollutant" exclusion stated:
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. The term POLLUTANTS, as used herein, is not defined to mean potable water, agricultural water, water furnished to commercial users or water used for fire suppression.
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Contamination includes any unclean, unsafe, damaging, injurious or unhealthful condition, either actual or potential, which arises out of the presence in the environment of any POLLUTANT, whether permanent or transient.
Environment includes any person, any man-made object or feature, animals, crops and vegetables, land, bodies of water, underground water, or water table or aquifer, air and any other natural feature of the earth and its atmosphere, whether or not altered, developed or cultivated.
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It is the intent and effect of this exclusion to exclude any and/or all coverages afforded by this policy for any CLAIM, action, judgment, liability, settlement, defense or expenses, if any, arising out of the discharge, dispersal, release or escape of POLLUTANTS.
However, not all insurance policies define the term "pollutant" or "contaminant.” In these cases, the terms must generally be given their common, ordinary meaning. Merriam-Webster Dictionary defines "pollutant" as:
A substance that makes land, water, air, etc., dirty and not safe or suitable to use.
and "contaminant" as:
Something that makes a place or a substance (such as water, air, or food) no longer suitable for use.
In the "pollutant" exclusion context, a common interpretation of the term "contamination" is the one adopted by the Texas Court of Appeals in Auten v. Employers National Insurance Company: "A condition of impairment or impurity results from mixture or contact with a foreign substance."2
Now just because the term "pollutant" or "contaminant" can be found in an English dictionary does not by any means suggest the exclusion is unambiguous. Courts throughout the United States are sharply divided whether the "pollutant" exclusion applies only to "environmental" or "industrial" types of pollution. I will dive deeper into how and why courts have made this distinction in Part III of this series.