In this particular case, pollution caused by one of the “specified causes of loss” (of which explosion is one) is covered as damage arising from that specified peril. If, however, pollution occurs as the result of a peril other than one of the specified causes of loss, coverage would be provided under the additional coverage provision, albeit at a limit of $10,000. We believe that the intent of the policy drafters was to select certain perils (i.e., the specified causes of loss) that should be accorded full coverage even if pollution results, while at the same time provide more limited coverage for pollution resulting from all other perils.

What is the appropriate position?

Illinois Subscriber

A

As we understand the loss, a mercury-vapor lamp over an indoor swimming pool exploded, releasing mercury into the pool. The mercury polluted the water and necessitated the draining, cleaning, testing and refilling of the pool. We assume that more than the water was damaged, i.e., that mercury traces had to be removed from the pool itself, which we believe meets the policy requirement of direct physical loss to property.

Dispersal or release of pollutants is excluded under the special causes of loss form unless that dispersal or release is itself caused by any of the specified causes of loss. Explosion, which is the cause of loss in this situation, is one of the enumerated specified causes of loss. Therefore, the pollution exclusion does not apply to this loss.

Because, in this particular case, the pollution was caused by one of the specified causes of loss (explosion), the damage arising out of that explosion should be covered in full.

Dispersal or release of pollutants is excluded under the special causes of loss form unless that dispersal or release is itself caused by any of the specified causes of loss. Explosion, which is the cause of loss in this situation, is one of the enumerated specified causes of loss. Therefore, the pollution exclusion does not apply to this loss.

The answer may be different, however, if the water in the pool were considered to fall within the category of property not covered. Pool water would not typically be considered to fall within this category, but, rather, to be personal property of the insured.

Should the pool water be considered property not covered, the pollutant cleanup additional coverage would apply since that additional coverage applies to cleanup of land and water. While it may seem a stretch that water in a swimming pool is what the policy drafters intended, water is not a defined term so could be subject to court interpretation. If a court were to determine that the pool water fell within the category of property not covered, only the $10,000 of pollutant cleanup coverage would be triggered.