Where there’s smoke, is there a pollutant

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Question. I had a recent claim that was denied by Travelers as they are deeming smoke from a fire as a pollutant. Therefore, any resultant cleanup is not a covered claim because it falls under the definition of a pollutant. Our insured is a contractor who installs appliances on behalf of Home Depot and other retail outlets. They installed a range in a home and turned it on to burn off any excess, and told the homeowner to leave it on for 30 minutes. However, the insured forgot to remove a cardboard box, which contained a part for the oven, from the oven. The cardboard box caught fire, filling the house with smoke. Home Depot replaced the damaged stove after the incident (not at our insured's cost). The homeowner is now requesting coverage for smoke damage to drapes and furniture, as well as duct cleaning and wall painting.

— Ohio Subscriber

Answer. The CG 00 01 includes smoke in its definition of pollutants, including soot, vapors, and other gaseous or thermal irritants. Also under exclusions is an exclusion for injury or damage arising out of heat, smoke, or fumes from a “hostile fire”. A “hostile fire” is one that becomes uncontrollable or breaks out from where it was intended to be. The cardboard catching on fire was a hostile fire. The carrier is correct, the smoke damage is excluded.

Oven cleaner as pollutant

Question.A question has surfaced concerning application of the pollution exclusion language contained in HO 03 04 91. The insured applied oven cleaner to kitchen cabinets, which resulted in damage to all cabinet surfaces arising out of contact with the chemicals. The form reads as follows:

Section I Perils Insured Against Cov A & B does not insure loss:

2. Caused by…

e. any of the following…

(5) Discharge, dispersal, seepage, migration, release, or escape of pollutants unless the discharge, dispersal, seepage, migration, release or escape is itself caused by a Peril Insured Against under Coverage C of this policy. “Pollutants” means 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.

The 1991 policy requires that one of the named perils under coverage C must cause the chemical release in order for coverage to apply. None of the listed causes of loss are present. A difference of opinion exists over whether this claim should be denied based on whether the oven cleaner is a pollutant.

— Ohio Subscriber

Answer. Although oven cleaner is a readily available consumer product, that doesn't mean it isn't a pollutant. Most oven cleaner containers have warnings to avoid contact with skin or eyes, avoid breathing the fumes for any length of time, and otherwise indicate that it's toxic. If you look at the Easy-Off website, the company readily admits that it's a caustic substance. Therefore, the pollution exclusion would apply.

Grease is not a pollutant

Question.A grease trap in a tenant's insured restaurant rotted out, causing damage to unrented space owned by the landlord. Does grease meet the definition of “pollutant,” and would the pollution exclusion apply?

— Massachusetts Subscriber

Answer. No, grease does not fit the definition of “pollutant,” and the pollution exclusion does not apply to preclude coverage here. “Pollutant” is a defined term in the policy and it means “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”

A majority of courts now hold that the term “pollutant,” as contemplated by the policy, encompasses something that causes environmental damage. That's not the case in this instance. So, it is our view that calling grease a pollutant is a stretch. Because a reasonable argument was made against applying the exclusion, the benefit of the doubt goes to the insured.

The insured accidentally damaged someone else's property and that is what the general liability policy is meant to cover.

Pollution cleanup and the CGL form

Question. Our client operates an automotive supply business. His warehouse burned to the ground. Much of his merchandise consisted of fuel and fuel additives in aerosol containers. The heat from the fire caused the containers to leak. The property abuts a river, which the township claims is now polluted. The insured has been requested to begin a cleanup operation of the water.

The CGL insurer is denying coverage. When we asked about the exception to the pollution exclusion, for bodily injury or property damage arising out of heat, smoke or fumes from a hostile fire, the adjuster said that the next paragraph, which states that there is no coverage for loss, cost or expense arising out of any request to clean up pollutants, nullified the exception.

If that is the case, why have the exception there?

— Pennsylvania Subscriber

Answer. The exception to the pollution exclusion f. provides that there is coverage for property damage or bodily injury arising out of smoke, heat, or fumes from a hostile fire. Smoke and fumes in particular, in and of themselves, are thought of as pollutants, and the form gives coverage for damage arising from these as well as heat. The paragraph the adjuster refers to (f.(2)) is to preclude coverage for an order or request to clean up the effects of pollutants when no hostile fire was involved. In other words, if the insured has been requested to clean up waste he has been dumping in a nearby creek, he can't submit the bill for the cleanup to his insurer for payment.

As to your particular incident, the editors are not as one in agreeing there is coverage. One editor says that the damage from the pollutants arising from the hostile fire must be direct, as when smoke discolors a nearby building and permeates its contents. Another editor thinks that the heat caused the aerosol cans to release their contents into the water, so the pollution damage arose out of the heat.

It may be left to a court to make the final determination.

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