A small fire caused interior damages to a home including building materials made with asbestos. As a result of the fire and airborne asbestos, personal property throughout the home was impacted with much of the personal property being discarded after being deemed by experienced professionals as Non-Salvageable. The insurance carrier acknowledged coverage for required abatement and repairs to the home and has acknowledged coverage for personal property that sustained accidental direct physical damage caused by the fire. However, the insurance carrier asserts personal property damaged by the release of asbestos during the fire is not covered. While the policy contains a contamination/pollution exclusion, the exclusion makes an exception when the escape of the contamination is caused by a covered peril:
SECTION I – LOSSES NOT INSURED

1. We will not pay for any loss to the property described in Coverage A that consists of, or is directly and immediately caused by, one or more of the perils listed in items a. through m. below, regardless of whether the loss occurs abruptly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of these:
. . .
j. contamination or pollution, meaning the presence, discharge, dispersal, seepage, migration, release, or escape of contaminants or pollutants at or from any source. This does not apply if the presence, discharge, dispersal, seepage, migration, release, or escape is itself caused by a peril described in SECTION I – LOSSES INSURED, COVERAGE B – PERSONAL PROPERTY.
(1) Contaminants and pollutants include but are not limited to any:
(a) solid, liquid, gaseous, or thermal irritant, including smoke from agricultural smudging or industrial operations, smog, soot, vapor, fumes, acids, alkalis, chemicals, pathogens, noxious substances, asbestos, or lead;
(b) contaminants or pollutants resulting from any natural resource extraction activities; or
(c) fuel oil except as specifically provided in SECTION I – ADDITIONAL

This is my question: Is the insurance carrier's position justified in denying coverage for personal property items that were deemed non-salvageable due to asbestos contamination, when the asbestos was released as a direct result of the covered fire event?

The problem is the exception is for the dwelling itself which is Coverage A. Personal property is Coverage B, and is named perils. There is no named peril for asbestos exposure to personal property. See page 12-13 of the policy.  However, smoke is a covered peril for personal property. If the asbestos particles were a component of the smoke, then the release of asbestos during the fire would be considered smoke damage, and should be covered.