Reducing Environmental Risk

Pollution Exclusions

Pollution exclusions were first introduced in surance policies beginning in the early-1970‚ to remove any doubt that may have existed in connection with coverage for damage caused by pollutants which were released as a normal part of the insured‚ business operations. By the late-1980‚ however, most insurance policies included ‚ absolute‚ pollution exclusions. Since most insurance policies specifically do not provide coverage for damage that is expected or intended from the standpoint of the insured‚ the focus of any analysis is not whether the damage caused by pollution is expected or intended. Rather, the most significant factor as to applicability of a pollution exclusion clauses is whether the pollutants were discharged into the environment unexpectedly or intentionally. Simply, pollution exclusion clauses concentrate on the specific actions that bring about the bodily injury or property damage (e.g., whether or not there was a sudden an accidental discharge of a pollutant). Thus, pollution exclusion clauses will only permit coverage on a claim where the discharge of a pollutant was sudden and accidental.

In New York, it is simply irrelevant whether or not the insured knew or intended that its discharge of pollutants would cause harm to the environment. The N.Y. Court of Appeals has held that “the pollution exclusion clause, by its own terms, does not distinguish between intended or unintended consequences of intentional discharges; rather, it excludes from coverage liability based on all intentional discharges of waste whether consequential damages were intended or unintended” See Borg-Warner Corp. v. Insurance Co. of North America, 174 A.D.2d 24 at 32 (citing Technicon Elects. Corp. v. American Home Assur. Co., 74 N.Y.2d 66 (1989))



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