While most policyholders recognize that homeowners insurance policies usually have a multitude of exclusions that limit the perils covered by a policy, many exclusions are not straightforward in terms of the types of risks that the exclusion is intended to encompass. Insurance companies frequently rely on broad or creative interpretation of exclusions to dispute claims by policyholders. Occasionally, language in a policy can be construed to essentially make the policy worthless to the insured. Policyholders should carefully read their entire policy and ask questions to mitigate the possibility of paying premiums on a policy that will not provide the anticipated coverage when a loss occurs.
The Wisconsin Supreme Court recently issued two separate court opinions that appear to lead to just such a result. Both cases addressed whether the pollution exclusion in a commercial insurance policy applied to claims for damage caused by companies engaged in operations involving the storage and disposal of septage. The majority opinion ruled that claims for such losses were excluded under the pollution exclusion of the policy even though the company’s primary operation was transporting and disposing of septage.
The Chief Justice for the court observed in dissent, “[t]hese septic companies purchased general liability policies to insure their business operations, that is, they purchased policies to cover damage they might cause in the ordinary course of their hauling, storing and disposing of septage.” The Chief Justice argued that a reasonable person in the position of the policyholders would not anticipate that losses incurred from the insured’s core business operation would be considered “pollution” under the general liability policy.
Despite this commonsense observation, the majority ruled that septage was a “pollutant” under the policy. This designation by the majority meant that liability for the losses caused by the spills were not covered because the perils fell within the pollution exclusion under the policy. The majority opinion in these cases leads to the counter-intuitive result that one of the most basic risks based on the nature of the policyholder’s business operations was excluded from the policy.
These court decisions also demonstrate the importance of a careful review of your commercial policy. The commercial liability policy of the policyholders would still cover losses from perils like collisions involving company employees during the course and scope of business. However, the companies involved in these cases could not reasonably assume that a general liability policy would exclude risks associated with the core operations of the company. While the scope of materials and hazards encompassed by the term “pollution” might legitimately include septage if the business manufactures electronics, it seems inappropriate to read this term to include septage when the company is engaged in the business of septage disposal.
Because subtle variances in the interpretation of a policy can have a profound impact on your claim, policyholders with coverage and claim questions should seek legal advice. If you have questions about Florida property insurance claims, you are welcome to contact my insurance claims law firm. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.