The United States Court of Appeals for the Eleventh Circuit affirmed a Georgia federal district court decision that stormwater fell under the pollutant exclusion in an insurance policy because it qualified as a “pollutant.” Under Central Mutual’s insurance policy, pollutants were defined as any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, soot, fumes, acids alkalis, chemicals, and waste.
The District Court’s Decision
A lawsuit against Centro Development Corp. (“Centro”) claimed that an adjacent property’s storm water caused silt and other contaminants to harm the plaintiff’s property. Centro’s insurer, Central Mutual Insurance Co. (“Central Mutual”), refused to pay the claim, basing its denial on the policy’s pollution exclusion. Centro then sued Central Mutual, alleging the claim should have been paid and coverage should not have been denied. Centro’s complaint was dismissed by the U.S. District Court for the Northern District of Georgia. Citing a Georgia Supreme Court decision, the District Court reasoned that the pollutant at issue did not need to be explicitly named in the policy for the clause to apply. The District Court found Centro Mutual’s insurance policy pollution exclusion was unambiguous and that storm water qualified as pollution under the insurance policy terms. Centro appealed the court’s decision to the Eleventh Circuit.
The Appeals Court Decision
The Eleventh Circuit explained that it had previously held stormwater qualified as a pollutant under another insurance carrier’s policy with the exact same language in its ruling of Owners Ins. Co. v. Lake Hills Home Owners Ass’n, INc. The Appeals Court also noted it had previously held in Hughey v. JMS Dev. Corp. that rain water that flows from an area where activities are being conducted that disturb the land — including grading and clearing — qualifies as a pollutant. The Eleventh Circuit then held that stormwater unambiguously qualified as a pollutant under Central Mutual’s insurance policy.
Virtually everyone has at least some type of insurance coverage. That being said, the average person does not necessarily understand the benefits of coverage – as well as the proper application of exclusions – available in any given circumstance. As a result, non lawyers do not understand the importance of how to properly submit a claim. Even worse, they may take a coverage denial at face value and not force the insurer’s hand to pay for covered claims. As can be seen by the cases described above, insurance law is highly technical and requires years of experience to master not just policy language but the legal application of this language to specific scenarios.
If you have questions about insurance policy terms, including exclusions, contact a knowledgeable Georgia attorney right away.