SDV Insights

Court Broadly Interprets Pollution Exclusion to Bar Coverage for Nontraditional Pollution Under CGL

There is a tremendous division, and no clear consensus, among courts regarding whether the pollution exclusion applies only to losses arising from traditional environmental pollution. For example, New York and Nevada have held that the pollution exclusion applies only to traditional environmental pollution. By contrast, Florida and Pennsylvania hold that the pollution exclusion bars coverage for all injuries caused by the release of contaminants or pollutants during commercial activities.

Eleventh Circuit Chimes in on Florida’s Trigger of Coverage Debate 

A recent Eleventh Circuit holding regarding a Florida construction defect case gives builders and general contractors cautioned hope. Construction defect claims often involve latent or progressive property damage that does not become discoverable until several years after the damage commences. Florida courts remain divided on when property damage triggers commercial general liability (“CGL”) coverage at the time the damage actually occurs, under the injury-in-fact rule, or at the time the damage becomes manifest, under the manifestation rule.

S.D.N.Y Court: Wrap-Up Project Loss Must Be Shared Pro-Rata Between Wrap and Non-Wrap Insurers 

Large-scale construction projects are increasingly insured through consolidated insurance programs (or “wrap-ups”), in which either the owner or general contractor purchases general liability insurance for itself and for certain contractors performing work at the project job site. Wrap-ups streamline liability insurance for project losses to a single tower of coverage, thereby avoiding the in-fighting and insurance coverage priority disputes that occur under the traditional insuring model, where each contractor purchases its own coverage. Despite these intentions, however, some project losses expand beyond the scope of the wrap-up, resulting in disputes between wrap-up insurers and insurers outside of the program.