Is My Drywall Chinese? - HB Litigation Conferences

Other courts have found that policyholders need not rely on estoppel principles to secure
coverage for environmental liability, finding that the regulatory history of the pollution
ents for coverage. 4
exclusions supports the policyholders’ reasonable argum
The “Absolute” Exclusion in the 1980s
As with the “sudden and accidental” pollution exclusion, the insurance industry made
representations to state insurance regulators in seeking to secure regulatory approval of the APE.
In seeking approval for the APE, insurance companies promised regulators that ordinary
products and premises claims would remain covered notwithstanding addition of the proposed
“absolute” exclusion. In 1985 hearings, the New Jersey State Insurance Department heard
testimony from various members of the insurance industry confirming that the insurance industry
would not use the then-proposed exclusion to sweep too many potential non-environmental
liabilities within its reach. The insurance industry sought to allay regulators’ fears about
overbreadth and, thus, secure the needed approval of this exclusion. Michael A. Averill, a
manager of the Insurance Service Office’s (“ISO”) 5 Commercial Casualty Division, testified that
the insurance industry did not intend to use the revised pollution exclusion as a bar to coverage:
“[The purpose of the change in policy language] is to introduce a complete on-site emission and
4 E.g., American States Ins. Co. v. Kiger, 662 N.E.2d 945 (Ind. 1996); Alabama Plating Co. v.
United States Fire & Guar. Co., 690 So. 2d 331 (Ala. 1996). Other courts have found the
“sudden and accidental” pollution exclusion is ambiguous and thus have rejected insurance
company arguments against coverage for gradual pollution. See, e.g., Eugene R. Anderson,
Jordan S. Stanzler, & Lorelie S. Masters, Insurance Coverage Litigation ch. 15 (2d ed. 2000).
5 ISO is an insurance industry organization that, among other things, creates standard insurance
policy forms for the insurance industry. E.g., In re Ins. Antitrust Litig., 723 F. Supp. 464 (N.D.
Cal. 1989), rev’d, 938 F.2d 919 (9th Cir. 1991), aff’d in part, rev=d in part, & modified sub
nom., Hartford Fire Ins. Co. v. Cal., 509 U.S. 764 (1993).
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