Pollution Exclusion in Comprehensive General Liability Insurance Policy Applies to Environmental Contamination Situations
In Pacific Employers Ins. v. Clean Harbors, the insurer, Pacific Employers (“Pacific”), issued an occurrence-based Comprehensive General Liability insurance policy to Clean Harbors, as policyholder. Another insurer, National Union (“National”), issued an excess umbrella liability insurance policy to Clean Harbors that was excess to the Pacific’s policy. National’s policy provided that the insurance did not apply to “any liability arising out of the actual or threatened discharge, dispersal, seepage, migration, release or escape of pollutants anywhere in the world.”
Eddie Lopez (“Lopez”) was employed as a truck driver and picked up garbage from commercial sites including Clean Harbors. Clean Harbors engaged in the treatment, transfer, storage, and disposal of hazardous waste. Lopez filed suit against Clean Harbors and alleged that he suffered injuries and illness as a result of his exposure to toxic chemicals at Clean Harbors’ facility in Chicago.
The issue before the court was whether the pollution exclusion in the National policy was ambiguous. The parties agreed that the Illinois Supreme Court’s holding in American States Ins. v. Koloms was the controlling law on whether the pollution exclusion was ambiguous. The court in Koloms held that the pollution exclusion applied “to only those hazards traditionally associated with environmental pollution.” Thus, the dispositive question in Pacific Employers Ins. v. Clean Harbors turned on whether or not the damages alleged in the Lopez lawsuit were an instance of traditional environmental pollution.
The court held the language of the pollution exclusion to be ambiguous. In addition, the court held that a principal object of a CGL policy was to insure against liability for personal injury and that a personal injury caused by chemicals did not remove it from the intended scope of the policy based on the pollution exclusion. As the Koloms court held, the pollution exclusion only applies to situations of “environmental contamination.” The court held that Lopez sustained injuries during his day-to-day activities and did not place the claim within the pollution exclusion.
Pacific Employers Ins. Co. v. Clean Harbors Environmental Services, Inc., 2010 WL 438372 (N.D. Ill. 2010).
