A shot from the neck-down of a judge holding a gavel. When reading the endorsements independently and in sequence, the justices found that the total pollution exclusion replaced the standard policy language, and the limited exception only modified it. (Credit: moodboard/Adobe Stock)

The Supreme Court of Rhode Island has vacated a lower court’s grant of summary judgment to a commercial insurer that the company does not have to defend a heating and air-conditioning company against a homeowner’s suit for property damage. The case is Regan Heating & Air Conditioning v. Arbella Prot. Ins. Co., 2023 R.I. LEXIS 6 (R.I. 2023). 

Regan Heating & Air Conditioning (Regan) was sued by a homeowner who found 170 gallons of home heating oil in his basement the day after Regan began installing a new heating system. Regan sought coverage from Arbella, but the claim was denied for pollution, which the policy defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.” In the denial letter, Arbella stated that oil was a pollutant and therefore the loss was excluded by a total pollution exclusion endorsement that replaced the regular pollution exclusion in the policy. A limited exception endorsement for building heating equipment did not create ambiguity because the damaged property was not “owned, occupied by or rented or loaned to an insured”; Regan had merely worked at the property. Regan, on the other hand, asserted two points that allegedly showed otherwise: the endorsements were incompatible with one another, and the policy definition of “pollutant” was ambiguous

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