Cincinnati, Ohio-based Great American Insurance Company and its policyholder have reached an agreement with respect to all outstanding issues relating to the availability of excess insurance coverage for lawsuits brought by families of individuals who died in a 2007 Houston building fire. The fire was intentionally set by an arsonist and resulted in three fatalities.

Great American had previously implored a federal court in Houston to determine whether the total pollution exclusion of its excess policy applied to the claims asserted in the underlying lawsuits. This exclusion, like a similar exclusion in the policyholder's primary liability policy, barred coverage for certain injuries arising out of “pollutants.” According to both policies, “pollutants” include “smoke,” “soot,” and “fumes.”

The policyholder's primary policy, however, also contained what is commonly known as a “hostile fire” exception. This stated that its pollution exclusion does not apply to injuries arising out of “smoke” or “fumes” from a “hostile fire.” The Great American policy did not contain this exception.

The agreement between Great American and its policyholder will result in the dismissal of Great American's federal court action. Future proceedings initiated by the families of the individuals who perished in the fire will determine if the policyholder in question is liable. Great American's policyholder has consistently maintained that its conduct did not cause or contribute to the fire or its tragic consequences.

Source: Great American Insurance Group

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