Georgia Supreme Court Broadly Construes Insurance Policy Pollution Exclusion

Many commercial general insurance (“CGL”) policies exclude coverage for bodily injury or property damage caused by exposure to a “pollutant.” On September 22, 2008, the Supreme Court of Georgia held that carbon monoxide is a “pollutant” as the term is often defined in CGL policies and that coverage for claims related to carbon monoxide exposure are , therefore , barred by the pollution exclusion . The case, Reed v. Auto-Owners Ins . Co . , No. S07G1768, 2008 WL 4286606, at *2 (Ga. Sep. 22, 2008), should bolster previous Georgia case law that broadly construes the term “pollutant” according to the plain terms of CGL policy language in applying pollution exclusions.

In Reed, the plaintiff, a residential tenant, sued her landlord for carbon monoxide poisoning; the landlord subsequently made a claim with his insurance company under a CGL policy. The insurer filed a declaratory judgment action, seeking a declaration that there was no coverage in light of the policy’s pollution exclusion. When the trial court denied the insurer’s motion for summary judgment, the insurer appealed. The Court of Appeals reversed.

In affirming the Court of Appeals’ reversal, the Supreme Court of Georgia noted that “the very basis for Reed’s lawsuit is her claim that the release of carbon monoxide gas inside the rental house ‘poisoned’ her ….” Thus, “the plain language of the pollution exclusion clause excludes Reed’s claim … from coverage under the CGL policy.”

Justice Hunstein, joined by Justice Carley, dissented, arguing that the insured under a CGL policy would not reasonably expect that the policy’s pollution exclusion would apply to injuries caused by carbon monoxide. Construed to include carbon monoxide, Justice Hunstein argued, the pollution exclusion is rendered unreasonably broad given the inherent ambiguity of the terms used to define “pollutant”. The Reed decision, however, is one in a long line of Georgia cases that have upheld pollution exclusions as clear and unambiguous. E.g., Am. States Ins. Co. v. Zippro Const. Co., 216 Ga. App. 499, 455 S.E.2d 133 (1995) (ruling on asbestos); Truitt Oil & Gas Co., Inc. v. Ranger Ins. Co., 231 Ga. App. 89, 498 S.E.2d 572 (1998) (ruling on gasoline); Perkins Hardwood Lumber Co. v. Bituminous Cas. Corp., 190 Ga. App. 231, 378 S.E.2d 407 (1989) (ruling on smoke).