Cincinnati, Ohio-based Great American Insurance Company and itspolicyholder have reached an agreement with respect to alloutstanding issues relating to the availability of excess insurancecoverage for lawsuits brought by families of individuals who diedin a 2007 Houston building fire. The fire was intentionally set byan arsonist and resulted in three fatalities.

Great American had previously implored a federal court inHouston to determine whether the total pollution exclusion of itsexcess policy applied to the claims asserted in the underlyinglawsuits. This exclusion, like a similar exclusion in thepolicyholder's primary liability policy, barred coverage forcertain injuries arising out of “pollutants.” According to bothpolicies, “pollutants” include “smoke,” “soot,” and “fumes.”

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

The agreement between Great American and its policyholder willresult in the dismissal of Great American's federal court action.Future proceedings initiated by the families of the individuals whoperished in the fire will determine if the policyholder in questionis liable. Great American's policyholder has consistentlymaintained that its conduct did not cause or contribute to the fireor its tragic consequences.

Source: Great American Insurance Group

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