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Vermont: First-Party Pollution Exclusions Are Not Confined to Traditional Environmental Pollution.

Courts in a number of American states, notably California, have found that pollution exclusions in first-party policies are “inherently ambiguous” and that the purpose of such provisions is “to address liability arising from traditional environmental pollution, and not ‘ordinary acts of negligence involving harmful substances.’ ” On December 11th, the Vermont Supreme Court unanimously refused to follow that line of jurisprudence in Whitney v. Vermont Mut. Ins. Co., 2015 VT 140, 2015 Vt. LEXIS 120, 2015 WL 8540432 (Vt., Dec. 11, 2015), holding instead that a standard form pollution exclusion was unambiguous in nature and clearly operated to bar coverage after the spraying of a pesticide chased the policyholders out of their home. The insureds had a house in Rutland,

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Posted in Ambiguity, Contamination, Pollution

Smelly Cat – Closely-Divided New Hampshire Supreme Court Addresses Whether Cat Urine Is a Pollutant

Last Friday, New Hampshire’s highest court unanimously held that the pungent aroma of cat urine could constitute physical loss or damage under a property policy.  In Mellin v. Northern Security Ins. Co., 2015 WL 1869572, 2015 N.H. LEXIS 32 (N.H., Apr. 24, 2015), it split on whether such a loss was barred by standard pollution exclusion language, however.  Three of the five justices (including a specially-appointed retiree) held that the exclusion was ambiguous in nature.  The Chief Justice and another member of the court disagreed, labeling the provision “plain and unambiguous” and clearly applicable to preclude coverage for a pervasive cat odor problem. On the TV show “Friends,” Phoebe Buffay used to entertain patrons at the Central Perk coffee shop

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Posted in Ambiguity, Direct Physical Loss or Damage, Homeowners Coverage, Odors, Pollution

Silica Dust Damage Held Barred by Pollution and Faulty Workmanship Exclusions in New York

Building construction frequently generates silica dust, a substance that can cause lung disease and other respiratory problems.  Abrasive sand-blasting or jack hammering as well as concrete drilling and block cutting can lead to its release.  In Broome Cty. v. Travelers Indem. Co., – N.Y.S.2d –, 125 A.D.3d 1241, 2015 WL 790256, 2015 N.Y.App.Div. LEXIS 1706 (N.Y.App.Div., Feb. 26, 2015), a unanimous panel from New York’s intermediate level appellate court held that the pollution and faulty workmanship exclusions in a first-party policy barred coverage for the property damage when silica dust spread throughout an office building due to construction activities nearby. The insured was Broome County, the owner of a building in a government complex.  During the construction of a parking

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Posted in Ambiguity, Contamination, Faulty Workmanship or Design, Particulates, Pollution

Virginia Court Nixes Claim Chinese Drywall Damage to HVAC Systems is Covered as Equipment Breakdown

In Travco Ins. Co. v. Ward, 284 Va. 547, 736 S.E.2d 321 (2012), the Virginia Supreme Court held that loss occasioned by the sulfuric gas released by defective Chinese drywall was excluded under the primary coverage grant of a property policy because of exclusions for corrosion and pollution.  Last month, a Virginia federal court shut down claims that such a loss might nonetheless be covered under a policy’s secondary coverage provisions extending coverage to equipment breakdown.  The matter was Nationwide Mut. Ins. Co. v. CG Stony Point Townhomes, LLC, 2015 WL 236826, 2015 U.S. Dist. LEXIS 5682 (E.D.Va., Jan. 15, 2015). The policyholder made claim after the heating, ventilating, and air-conditioning (HVAC) systems in five townhouses at its Creek’s Edge

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Posted in Contamination, Corrosion, Mechanical Breakdown, Pollution

Wisconsin Adds “Septage” To The List Of Substances Deemed To Be Pollutants

In Preisler v. Kuettel’s Septic Service, LLC, et al., 2014 WL 114325 (Wisc.App., Jan. 14, 2014), the intermediate level of appellate court in Wisconsin recently held that “septage” – a combination of water, urine, feces, and chemicals that is used as a fertilizer – was “unambiguously a pollutant.”  The case involved the scope of comprehensive general liability (“CGL”) coverage, but the CGL policy exclusions at issue were virtually identical to pollution exclusions commonly found in first-party contracts of insurance.  The decision is important to property carriers as a result, and it also rejects a number of arguments that first-party insureds frequently make in an effort to limit or avoid the application of such language. The Preislers owned a dairy farm

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Posted in Efficient Proximate Cause, Exclusions, Pollution, Reasonable Expectations
About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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