The use of the pollution exclusion in nontraditional environmental contexts

Abstract

Since the early 1990s, policyholders and insurers have increasingly sought guidance from state and federal courts concerning the scope of the standard and absolute pollution exclusions. Some insurers have applied the exclusions in a wide variety of nontraditional environmental damage claims, including sick‐building syndrome suits, lead‐paint claims, and claims arising from exposure to carbon monoxide, pesticides, and even skunk spray. In response to this reliance on the exclusions, policyholders generally present three arguments in an attempt to limit the scope of the provisions: (1) the language of the pollution exclusion is ambiguous because the terms contaminant, irritant, and pollutant are open to more than one reasonable interpretation; (2) the pollution exclusion only applies to damage claims arising from gradual environmental pollution; and (3) the pollution exclusion is limited by the doctrine of reasonable expectations. State and federal courts are split concerning the scope of the standard and absolute pollution exclusions, and the persuasiveness of positions taken by both insurers and policyholders. This article will address the courts’ analyses of the policybolder arguments.