SW Legal studies in Business

Pollution Exclusion Includes Carbon Monoxide from Defective Heater
Description A commercial liability insurance policy for a homebuilder, which contained a pollution exclusion clause, relieved the insurer of providing coverage for injury caused by release of carbon monoxide gas from a defective heater installed in a home. The policy terms were clear in covering such incidents.
Topic Insurance
Key Words Commercial Liability; Pollution Exclusion; Coverage
C A S E   S U M M A R Y
Facts Haus built a new home for the Arias in 1998. The heating unit caused substantial levels of carbon monoxide to enter the living area of the home. The problem was discovered in 1999. The Arias claim that they have suffered permanent health damage as a result of exposure to the gas. They sued Haus and others. Haus demanded defense and indemnification by Selective, his commercial liability insurer. The insurer contended that the pollution exclusion, which was noted in bold print and detailed in explanation, meant that coverage did not apply to this case. The trial court held for the insurer; Haus appealed.

Affirmed. The exclusion in the policy covered this incident, so the insurance company is relieved of the duty to defend and indemnify. As stated in the policy, carbon monoxide is a "gaseous contaminant" that was "discharged, dispersed, released or escaped" into the home causing injury to the homeowners. The language in the policy is clear and unambiguous and will be enforced like any other contract. This policy provision is not in violation of public policy as the parties were on notice of it.

Citation Leo Haus, Inc. v. Selective Insurance, 801 A.2d 419 (App. Div., N.J., 2002)

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