The flooding that has accompanied Hurricane Florence raised concerns about pollution from flooded ash dumps and hog farms. With confirmation of at least one failure of an ash dump and the breach of a lagoon holding hog waste, those concerns have become a reality. How this pollution may impact first party property claims remains to be seen.
Most residential and commercial policies exclude loss or damage caused by pollution. Typical language provides:
Except as otherwise provided, the Policy does not insure against loss, damage or expense caused by or resulting from:
Release, discharge or dispersal of Pollutants from and on the Named Insured's premises during the term of the Policy unless the release, discharge or dispersal is caused by fire, lightning, windstorm, hail, leakage from fire protective equipment, explosion, aircraft, vehicles, smoke, sonic shock wave, riot, civil commotion or vandalism during the policy period. This Policy does not insure off premises pollution cleanup costs from any cause. However, as this language makes clear, the exclusion does not apply if the “release, discharge or dispersal” is caused by an enumerated cause of loss. These causes are sometimes referred to as “specified causes of loss.” While “windstorm” is one of the enumerated causes of loss, flood is not. Even if flood were covered by an endorsement or a separate policy, unless that endorsement or policy provides coverage for pollution, it may not make flood a “specified cause of loss” under the main form. This discrepancy may lead to creative arguments that “windstorm” was the cause of the loss even if subsequent flooding was the ultimate mode of transport for the pollution.
Some policies may include an extension of coverage that provides:
The Policy insures the expenses actually incurred by the Insured to cleanup and remove debris of property Insured hereunder defined as a Pollutant and other Pollutants from land or water on covered premises if the release, discharge; dispersal, is caused by fire, lightning, windstorm, hail, leakage from fire protection equipment, explosion, smoke, sonic shock wave, riot, civil commotion, or vandalism during the policy period.
This extension of coverage provides coverage for the removal of debris or the cleaning of land or water that is polluted. Like the exclusion cited above, it requires the “release, discharge or dispersal” to be caused by an enumerated cause of loss.
While it remains unclear if this pollution hazard will impact first party property claims, due to the potential for more incidents like this, the possibility that residential or commercial properties are impacted looms large.
