Carbon Monoxide Is Considered a Pollutant for Purposes of the Pollution Exclusion
March 27, 2017
An Oregon district court has ruled that carbon monoxide is considered a “pollutant” as defined in a commercial general liability insurance policy, when the policy's pollution exclusion excludes coverage for claims arising from carbon monoxide poisoning. The case is Colony Ins. Co. v. Victory Construction LLC, No. 3:16 – cv- 00457-HZ (D.Ore. March 9, 2017).
The insurer, Colony Insurance Company (Colony), alleges that Victory Construction LLC (Victory) was negligent in installing and ventilating a natural gas swimming pool heater, and that they failed to warn of the risks of carbon monoxide poisoning associated with operating the heater in an insufficiently ventilated area. Colony alleges that as a result of the above mentioned negligence, carbon monoxide filled the home of the client and caused the family to become ill.
The pollution exclusion precludes coverage for damages that would not have occurred “but for the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of hazardous materials at any time” and goes on to define hazardous materials as “pollutants, lead, asbestos, silica, and materials containing them” and pollutants as “any solid, liquid, gaseous or thermal irritant or contaminant. . . ”
Victory Construction asked Colony Insurance to defend and indemnify them in the suit brought by the clients who had suffered bodily injury due to the carbon monoxide exposure. Colony Insurance argued that the above pollution exclusion precluded coverage for the claims brought against the construction company arising from the carbon monoxide exposure.
The district court ruled in favor of Colony Insurance, and found that the “only plausible interpretation” of the policy's terms resulted in the conclusion that carbon monoxide should be considered a pollutant, and that the pollution exclusion applies to damages that are caused by carbon monoxide. Since the policy did not define the terms “irritant” or “contaminant” the court went off of the plain meaning analysis of the two words, and ruled that carbon monoxide is an irritant or contaminant under the plain meanings. The district court determined that Colony had no duty to defend or indemnify Victory Construction for the carbon monoxide exposure suffered by the clients.
Editor's Note: Although carbon monoxide is a naturally occurring gas that is present in the air that we breathe, if introduced at high levels it can become an irritant or contaminant that causes bodily injury. Several courts have determined that carbon monoxide is considered a pollutant for purposes of the pollution exclusion. Although this seems like a fairly straightforward decision, some courts have decided the opposite. (Apana v. TIG Ins. Co., 574 F.3d 679 (9th Cir. 2009).)