A Georgia-based contractor specialising in cooling system installations was sued after a maintenance worker died from exposure to leaking refrigerant gas at a facility where the contractor had installed the cooling system. The worker's family pursued a wrongful death claim against the contractor, who in turn sought indemnity from its liability insurers. The insurers refused to provide cover, invoking the pollution exclusion clause in their policies.
Insurance Policy Provisions
The insured contractor's policy contained an exclusion for injuries or damage arising from the “discharge, dispersal, seepage, migration, release or escape of pollutants.” The term “pollutants” was defined broadly, encompassing any irritant or contaminant in solid, liquid, gaseous, or thermal form, including chemicals and vapours.
Judicial Reasoning and Decision
- Interpretation of Pollutant: The refrigerant gas was held to fall squarely within the policy's definition of a pollutant. The court found no uncertainty in the wording and applied the definition as written, regardless of the substance's role in the insured's business.
- No Illusory Cover: The insured's contention that the exclusion rendered the policy meaningless, given the centrality of the chemical to its business, was rejected. The court noted that the policy still provided protection for other types of risks.
- Public Policy Considerations: The court declined to entertain arguments based on public policy, reiterating that clear contractual language must be enforced as written.
South African Position
Liability insurance policies generally exclude liability “directly or indirectly caused by or arising from Pollution,” unless such Pollution results from a “sudden, unintended and unexpected identifiable event.” This means that, unlike the broad approach followed in the Georgia case, South African policies may still provide limited cover for pollution-related incidents—but only where the pollution stems from a clearly identifiable, sudden, and accidental event, rather than from gradual, ongoing, or anticipated emissions.
Summary
The ruling demonstrates the weight given to unambiguous policy language in the context of the pollution exclusion. Policyholders should be aware that, where the wording is clear, courts are likely to enforce the exclusion strictly, regardless of the practical implications for the policyholder's business. In South Africa, however, there may be a limited exception for pollution arising from sudden and accidental events, but otherwise, the exclusion is similarly robust.
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