While Total Pollution exclusions have generally been applied broadly, insurers must be cognizant of a fascinating conflict between different state’s jurisprudence. This conflict involves the question of whether lead or lead based products and by-products are considered “pollutants” under a total pollution exclusion.

This conflict was highlighted recently when the Georgia Supreme Court found that a policy’s pollution exclusion applied to an injury that resulted from the ingestion of lead-based paint. In Georgia Farm Bureau Mut. Ins. Co. v. Smith, 2016 Ga. LEXIS 245 (Ga. Mar. 21, 2016), a minor tenant was injured due to ingestion of lead-based paint chips. The plaintiff insurer moved to disclaim coverage based on the policy’s pollution exclusion. Following the insurer’s victory at the trial level, the Georgia Court of Appeals reversed, claiming that lead-based paint was not a “pollutant” as defined under the policy because it wasn’t specifically mentioned in the exclusion. The Georgia Supreme Court noted that the pollution exclusion was not limited to environmental harms and that the exclusion needs to be evaluated by its terms in accordance with Georgia law. Additionally, the court referenced a prior Georgia case, Reed v. Auto-Owners Ins. Co., 284 Ga. 286, 667 S.E.2d 90 (2008), where the court found that the pollution exclusion applied to a claim related to carbon monoxide poisoning despite carbon monoxide poisoning not being explicitly mentioned as a pollutant. Using the same analysis, the Supreme Court held for the insurer, declaring lead based paint to be a pollutant for the purposes of the pollution exclusion.

Notably, New York courts take the opposite stance. The case of Westview Associates v. Guar. Nat. Ins. Co., 95 N.Y.2d 334, 338, 740 N.E.2d 220, 222 (2000) concerned essentially identical facts as Georgia Farm Bureau, in that a minor suffered bodily injury due to the ingestion of lead-based paint chips. The New York Court of Appeals, equivalent in stature to the Georgia Supreme Court, held that the lead-based paint chips did not constitute a pollutant. The Court of Appeals reasoned that, if lead-based paint chips were meant to be excluded by the policy, as the insurer claimed, then they would have been specifically mentioned in the exclusion. Since they were not, the court ruled that the issue constituted an ambiguity in the policy and interpreted it against the insurer.

The key difference between each states approach resides in their respective analytical framework. Georgia courts have a history of enforcing pollution exclusions without requiring the pollutants to be explicitly named in the policy—taking a common sense view of what is regarded as a pollutant. By contrast, New York plays by the card, requiring more specificity. This decision, once again, calls upon Underwriters to develop wording with enough breadth to carve-out the risks they are unwilling to embrace. What works in Georgia may not work elsewhere. Insurers have to be cognizant of where a given action is being litigated and where a given policy is issued.

Thanks to Joshua Gornitsky for his contribution to this post.  For more information, please email Dennis M. Wade at .