Property damage under most Commercial General Liability policies is defined as loss of use of tangible property that is not physically injured. (Photo: Shutterstock)
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Question: My claim involves a duct cleaning contractor who failed to close off a vent. The contents of the duct work were spewed into a bedroom. There has been no testing of the "dust" contents but the claimant alleges that particulates that cannot be cleaned damaged his property. The loss state is New Jersey.
Our policy contains an exclusion for Microorganisms, Biological Organisms or Organic Contaminants. It states: This insurance does not apply to: Liability, injury or damages of any kind, to include but not limited to "bodily injury", "property damage" or " personal and advertising injury", including costs or expenses, actually or allegedly arising out of, related to, caused by, contributed to by, or in any way connected with actual, alleged or threatened past, present or future claims arising in whole or in part, either directly or indirectly, out of the exposure to, presence of, formation of, existence of or actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of any microorganisms, biological organisms or organic contaminants, including but not limited to mold, mildew, fungus, spores, yeast or other toxins, allergens, infectious agents, wet or dry rot or rust, or materials of any kind containing them at any time, regardless of the cause of growth, proliferation or secretion; or (2) Any loss, cost or expense arising out of any: (a) Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of microorganisms, biological organisms or organic contaminants, including but not limited to mold, mildew, fungus, spores, yeast, or other toxins, allergens, infectious agents, wet or dry rot or rust, or any materials containing them at any time, regardless of the cause of growth, proliferation or secretion.
My question is: Would dust from a vent be considered a microorganism, biological organism or organic contaminant in New Jersey? There are no lab tests or scientific data to identify what's in the dust.
— New Jersey Subscriber
Answer: The exclusion in the policy is the standard pollution exclusion; the question of fact, which we cannot answer, is what is included in the vent dust?
An internet search indicates that vent dust can include not only fine dirt but also dead skin, pet dander, microorganisms from cat litter (toxoplasmosis), and other particulates such as pollen, mold spores, fungi, and even rodent feces. If these particles are left to contaminate your ducts, they can become a breeding ground for bacteria, mites, and other pests.
Admittedly, these sources are professional duct cleaners, so we refer to the Environmental Protection Agency website, which presents a more neutral view of the general contents of dust.
The duct cleaner is responsible for the failure to close off the vent. Following the logical progression, then, the customer is likely looking to the insurer to cover the cleaning and possibly the repair or replacement of the damaged property. The issue at hand is one of fact; if the dust contains allergens and such, as many duct cleaners claim, then the cleanup would be excluded under the listed pollution exclusion. However, if it is just general dust, the cleanup should be covered.
As always, it is up to the insurer to prove that an exclusion applies to the situation. So if the insurer wishes to deny coverage, it will be up to them to prove that there are pollutants in the vents.
Deer blood and the pollution exclusion
Question: We represent a church that had a deer jump through a sanctuary window resulting in physical and blood damage to the building, including pews and pew cushions. The deer eventually left the structure through another window in an adjacent school hallway. The church is covered under Special Form CP 10 30 06 07. The carrier has put us on notice that they may attempt to deny the deer blood damage under the pollution exclusion. Does this exclusion apply to the deer blood damage?
— Pennsylvania Subscriber
Answer: While an argument could be made for blood to be categorized as "waste" within the meaning of the pollution exclusion, this is a stretch. We noted in a previously-published Q&A regarding a homeowners policy and human blood (but with a similar pollution exclusion): "While bodily remains need to be cleaned up, they are not waste in the sense that they can be recycled, reconditioned or reclaimed. The pollution exclusion applies to gaseous, liquid or solid irritants including alkalis, acids, etc. While cleaning up a body may be distasteful, human remains aren't an irritant in the chemical sense that is described in the pollution exclusion. The exclusion specifically refers to manmade pollutants or contaminants, and exclusions are to be read narrowly. Therefore the remains are not pollutants and are not excluded."
This is referring to human remains, but the same would apply to deer blood.
Limited pollution liability coverage
Question: My client owns some property that is currently leased to others who use the site as a small grocery store. If the tenants were to put in an underground storage tank for gasoline sales, would endorsement CG 24 15, the limited pollution liability extension endorsement provide sufficient coverage for my client in the event of a pollution claim? Or, should we provide an underground storage tank policy for our client?
— Colorado Subscriber
Answer: CG 24 15 replaces the pollution exclusion (f) found in the standard CGL form. It provides limited protection, subject to an aggregate limit shown in the endorsement's schedule, for some on-premises exposures that could face a landowner. Under the standard CGL form, coverage for bodily injury or property damage arising out of the dispersal, discharge, release, or escape of pollutants at or from premises owned by any insured is excluded. CG 24 15 deletes this part of the pollution exclusion thereby giving coverage to a landowner like your client. However, that same endorsement declares there is no coverage when a pollutant escapes at or from a storage tank or other container that is below the surface of the ground and that subsequently is exposed by erosion or excavation, allowing the pollutant to escape at a premises owned by any insured.
So, while your client would have some limited liability protection if the storage tank leaks gasoline by using CG 24 15, that protection is gone if the storage tank is somehow exposed and the pollutants then leak out and cause damage.
As for the underground storage tank policy, CG 00 42, that policy states that damages and injuries due to the escape of pollutants from an underground storage tank are covered, subject to listed exclusions. CG 00 42 is a claims-made policy so the bodily injury and property damage have to occur after the retroactive date shown in the declarations and before the end of the policy period, and of course, a claim for damages has to be made in writing during the policy period or any extended reporting period.
If you use either CG 24 15 or CG 00 42, your client will have liability coverage on a limited basis. You should consult with your client and the insurer to obtain the better choice.
Pollution exclusion and dust damage
Question: The insured was remodeling the claimants' basement and sanded a concrete floor to level it. The insured used plastic to close off the basement, but dust somehow escaped from the basement and covered the upstairs living area through the heating ducts. As a result, the dwelling had to be cleaned of dust, and the owner had a loss of use while the cleaning was completed.
Does coverage apply? The policy has an absolute pollution exclusion and an asbestos/silica exclusion, so we are wondering if dust is considered a pollutant and if dust can cause property damage under the terms of this general liability policy?
— Ohio Subscriber
Answer: Property damage under the CGL form is defined as loss of use of tangible property that is not physically injured, so the policy would be applicable in this instance since the claimant suffered a loss of use of his property.
As for the exclusions, dust is not the same as asbestos/silica. As for the absolute pollution exclusion, are you talking about the standard pollution exclusion in the CGL form or the total pollution exclusion endorsement? If the latter, that applies to BI or PD that would not have occurred in whole or in part but for the actual discharge, dispersal, or escape of pollutants any time. So, as long as the dust can be considered a pollutant as defined, the exclusion would apply. You would have to check with an attorney who is familiar with court rulings in your jurisdiction as to whether the courts there see dust as a pollutant. Some courts today see the pollution exclusion as applying only to environmental issues and will not apply the exclusion to things like dust in a room or paint dropped into milk.
As for the standard pollution exclusion in the CGL form, aside from the definition of "pollutant" being met, that exclusion as worded would not apply in this situation. None of the paragraphs in the pollution exclusion fit the situation as you describe it.
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