This article was originally posted on The Northwest Policyholder, Miller Nash Graham & Dunn’s insurance coverage blog.
Contractors, builders, real estate managers, and others should be aware of a March 9, 2017, decision by an Oregon federal judge who found that carbon monoxide is included in the plain meaning of “pollutant” as defined in a liability insurance policy. As a result, an insured contractor had no coverage for its faulty work.
In Colony Ins. Co. v. Victory Constr. LLC, U.S. District Court, Oregon, Case No. 3:16-cv-00457-HZ, Colony Insurance sought a declaratory judgment that it had no duty to defend and indemnify Victory Construction in two state court personal-injury lawsuits. The defendant, Victory, installed a pool and was alleged to have been negligent in the installation and ventilation of a gas heater, resulting in the escape of carbon monoxide into a home, causing the residents to be sick. Victory was insured by Colony, which denied coverage for the residents’ ensuing claims. Colony’s Commercial General Liability Insurance Policy contained a Hazardous Materials Exclusion, i.e., a pollution exclusion. The policy defined “hazardous materials” as: “‘pollutants’, lead, asbestos, silica and materials containing them.” The definition of “pollutants” included “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” The court concluded that because carbon monoxide clearly fell within the definition of a pollutant, there was no coverage. Continue Reading