The Proper Reach of Pollution Exclusion Provisions In Insurance Coverage Claims

Most people would likely consider pollution to be a concept that is tied to harm to the environment — contamination of soil, groundwater, or ambient air.  Consistent with this common understanding of pollution, courts have repeatedly rejected the attempt by insurers to expand the scope of pollution exclusion provisions to bar coverage simply because an injury or loss involved the discharge of something that can be characterized as “an irritant or contaminant”.  For example, in Western Alliance Insurance Co v. Gioll, the Massachusetts Supreme Judicial Court rejected the argument that an insurance claim for carbon monoxide poisoning in a restaurant was barred by a pollution exclusion provision.  As the SJC noted, the pollution exclusion provision was drafted to address losses arising from pollution of the environment, not harm from defectively operating furnaces.

Ignoring the contrary case law in other jurisdictions, the Virginia Supreme Court yesterday ruled that defectively manufactured drywall which off-gases chemicals constitutes pollution within the meaning of a pollution exclusion provision in a homeowners policy.   In Travco Insurance Company v. Ward, the court reasoned that the drywall discharged a “gas” that was toxic and hence that discharge came within the meaning of the broadly drafted pollution exclusion.  This reasoning constitutes literalism untethered from common sense.  The Virginia court rejected the doctrine of  noscitur a sociis (“a word is known by the company it keeps”).  However, as other courts have recognized in rejecting the expansion of pollution exclusion provisions outside the context of environmental claims, words have nuances that must be considered if they are to be fairly construed.

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