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Insurance Law

Court Rejects 10,000 Page Pollution Exclusion

When it comes to how insurers have fared in Indiana, in their attempts to enforce the pollution exclusion, they are the mouse inside the boa tank at the pet store. Ironically, it could be the exact opposite. All insurers have to do is draft the pollution exclusion using the simple instructions that the Indiana Supreme Court has provided. In general, in Indiana, for the pollution exclusion to apply, the hazardous material argued to be a “pollutant” must be specifically mentioned in the pollution exclusion. It’s really that simple.

That was one of the issues in St. Paul Fire & Marine Ins. Co. v. City of Kokomo, No. 13–1573 (S.D. Ind. June 25, 2015), [subscribers can access an enhanced version of this opinion: | Lexis Advance]. The action involves coverage for City of Kokomo, for claims made against it by the Indiana Department of Environmental Management, for damages at a landfill. The City sought coverage from Travelers. There were lots of liability policies at issue containing various pollution exclusions. The one I’ll focus on here – “Indiana Required Endorsement” -- was from 2007 to 2011, which went like this (it’s lengthy, really lengthy, but that’s the point):

If any insuring agreement, endorsement, or other form in your policy contains an exclusion, limitation, or other coverage provision that applies to pollution, the following definition of pollutant:

• replaces the definition of pollutant, or the definition of pollutants, in that insuring agreement, endorsement, or other form if it contains a definition of that term....

Pollutant means any solid, liquid, gaseous, or thermal substance or material, including smoke, vapors, soot, fumes, acids, alkalis, chemicals, and waste, that:

• is identified as dangerous, hazardous, or toxic, or is otherwise regulated, in any federal or Indiana environmental, health protection, or safety law; or
• has an actual, alleged, or threatened irritating or contaminating effect on any person or property.

Federal or Indiana environmental, health protection, or safety law means any:
• law of the United States of America, which is also known as federal law; or
• Indiana state or local law;

that’s intended to:
• control pollution;
• protect or safeguard human health, or
• protect any part of the environment, whether indoor air, outdoor air, land, surface water, or underground water.

For example:

The following Federal laws:
• The Clean Air Act of 1970 (42 United States Code Section 7401).
• The Clean Water Act of 1977 (33 United States Code Section 1251).
• The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 United States Code Section 9601).
• The Emergency Planning and Community Right–To–Know Act of 1986 (42 United States Code Section 11001).
• The Federal Insecticide, Fungicide, and Rodenticide Act of 1972 (7 United States Code Section 136).
• The Occupational Safety and Health Act of 1970 (29 United States Code Section 651).
• The Pollution Prevention Act of 1990 (42 United States Code Section 13101).
• The Refuse Act of 1899 (33 United States Code Section 407) .
• The Resource Conservation and Recovery Act of 1976, which is sometimes also referred to as the Solid Waste Disposal Act, (42 United States Code Section 6901).
• The Safe Drinking Water Act of 1974 (42 United States Code Section 300f).
• The Toxic Substances Control Act of 1976 (15 United States Code Section 2601).
• The Section of the United States Code referenced after the title of each of the laws listed above is where each such law begins .
• Indiana state law: Any provision of Indiana Code Title 13 (Environment).

Federal or Indiana environmental, health protection, or safety law includes:

• any amendment to such law; and
• any list, regulation, or rule issued or promulgated under such law by a federal governmental authority or an Indiana state or local governmental authority.

Travelers argued that the pollution exclusion met the requisite specificity because it “incorporated multiple state and federal environmental laws, including CERCLA, and that substances classified as hazardous under CERCLA have already been discovered at the Site.” Travelers further explained that the exclusion “expressly bars coverage for damages caused by pollutants identified by CERCLA and that every substance the EPA has required the City to sample for the Site ‘is dangerous, hazardous or toxic under United States or Indiana health, safety, or environmental laws.’”

In response, the City argued that the pollution exclusion was unenforceable due to its “failure to identify substances with specificity.” The City claimed that the exclusion “‘raises ambiguity to an art form’ and that a policyholder of ordinary intelligence would not have a clear understanding of what substances are covered because it generally incorporates so many state and federal environmental laws.”

The pollution exclusion incorporates every federal and Indiana environmental law. I call it the 10,000 page pollution exclusion but I have no idea how many it really is (and maybe it’s even more). But it’s certainly a ton when you consider that it includes any list, regulation, or rule issued or promulgated under any federal and Indiana environmental law.

The Kokomo court was not persuaded by Travelers’s Hoosier maneuver:

“The Court concludes that the definition of ‘pollutant’ in the 2007–2011 Endorsement is not sufficiently specific such that the Court can grant summary judgment to Travelers regarding its duty to defend and indemnify the City. In so finding, the Court is cognizant that a policy is interpreted ‘from the perspective of an ordinary policyholder of average intelligence’ and that doubts about coverage are construed against the insurer and in favor of coverage. The 2007–2011 Endorsement does not specifically reference any of the substances that have already been found or are being tested for at the Site. Instead, it generally incorporates eleven federal laws; the environmental title of the Indiana Code; any amendments to any of those laws; and any list, regulation, or rule issued or promulgated by a federal governmental authority or an Indiana state or local governmental authority. This general incorporation of state and federal laws is insufficient to comply with Indiana’s stringent standard that an insurance policy “specify what falls within its pollution exclusion.”

Coverage Opinions is a bi-weekly (or more frequently) electronic newsletter reporting or providing commentary on just-issued decisions from courts nationally addressing insurance coverage disputes. Coverage Opinions focuses on decisions that concern numerous issues under commercial general liability and professional liability insurance policies. For more information visit

The views expressed herein are solely those of the author and not necessarily those of his firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. Coverage Opinions is gluten free but may contain peanut products.

    Randy Maniloff is Counsel at White and Williams, LLP in Philadelphia. He previously served as a firm Partner for seven years and transitioned to a Counsel position to pursue certain writing projects including Coverage Opinions . Nonetheless he still maintains a full-time practice at the firm. Randy concentrates his practice in the representation of insurers in coverage disputes over primary and excess obligations under a host of policies, including commercial general liability and various professional liability policies, such as public official’s, law enforcement, educator’s, media, computer technology, architects and engineers, lawyers, real estate agents, community associations, environmental contractors, Indian tribes and several others. Randy has significant experience in coverage for environmental damage and toxic torts, liquor liability and construction defect, including additional insured and contractual indemnity issues. Randy is co-author of “General Liability Insurance Coverage - Key Issues In Every State” (Oxford University Press, 2nd Edition, 2012). For the past twelve years Randy has published a year-end article that addresses the ten most significant insurance coverage decisions of the year completed.

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