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The (rock) subtleties of the absolute pollution exclusion INSURANCE

The exclusion of pollution has long been interpreted by the courts in the United States. Many substances are covered by the pollution exclusion, resulting in insurance coverage for the costs incurred by policyholders who deal with these substances on the waterways and in the air. In a recent case, the Court of Appeal of the fifth instance interpreted the exclusion of pollution related to quarry work and the unintentional release of “rock money” into a waterway.

in the Eastern Concrete Materials, Inc. v Ace American Insurance Co., No. 18-11043 (January 5, 2020), a subsidiary of the policyholder, accidentally released “rock money” from the settlement ponds of his quarry into a brook for trout fishing. “Fine stone grains” are the small particles of rock that arise when crushing and sieving rocks into ever smaller sizes. These particles are collected in settlement ponds and later removed, dried and either used or sold after storage. When released into the creek, the boulders caused physical damage to the creek by changing the flow and contours of the creek, which negatively affected trout and other creatures in the creek.

The company was asked by the environmental authorities to clean the stream and remove the boulders. The policyholder applied for reimbursement of the costs for the rehabilitation of the stream and the defense against environmental damage from his commercial roof insurance company. The policyholder did not have independent environmental cover. The insurance provider then brought an action for a declaratory judgment, with the aim of declaring that the incident falls under the soiling exclusion of the policy and that it is not obliged to defend or compensate the policy holder.

The pollution exclusion was a typical absolute pollution exclusion, stating that the insurance does not apply to the release or escape of pollutants or the request to remove or remove pollutants. All solid pollutants including waste materials were defined as pollutants. Waste included materials that are or should be recycled, reconditioned, or recovered. The full relevant text of the pollution exclusion is included in the opinion.

The district court gave the insurance company a summary judgment that the pollution exclusion applies to the cash cover. The fifth circuit confirmed.

In its confirmation, the court agreed that the rock funds were contaminants. The fines in the rock did not affect water quality, but the court found that they affected the entire stream ecosystem and became contaminants. As the court described, the “rock fines, short”[e]d [the creek] unsuitable for use as a habitat for trout and other species. “(Without specification). Since the court concluded that stone fines were classified as contaminants within the meaning of the directive, a summary judgment was appropriate. Even if stones or tiny stone particles do not affect water quality, they are considered contaminants if they come into conflict with the ecosystem and fall below the broad limits of the absolute exclusion of pollution.

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