Is My Drywall Chinese? - HB Litigation Conferences

approval of the APE on assurances that the APE did not preclude coverage for such events, 34 it
and other state insurance departments required this endorsement to prevent use of the APE to
deny coverage for such events. As a result, insurance companies were not allowed to charge for
this endorsement. This endorsement, then, is not an expansion of coverage, but merely a
confirmation of coverage that remained in the standard CGL after the APE was added. 35 The
same is true for the hostile fire endorsement. 36
THE TREND IN STATE COURT DECISIONS LIMITING
THE “ABSOLUTE POLLUTION EXCLUSION” TO ITS INTENDED PURPOSE
A survey of state appellate and supreme court decisions confirms the trend of state courts
to limit the applicability of the APE to traditional environmental pollution. Today, in part
because of the insurance industry’s over-reaching and its representations to regulators in the
1980s, two-thirds of the state appellate and supreme courts that have addressed the issue have
limited the exclusion to true environmental pollution. This trend is demonstrated by the attached
survey of appellate decisions in the 50 states and the District of Columbia. Those courts agree
that the APE should not apply to preclude the CGL policy’s traditional coverage for tort liability.
Some cases have rejected use of both the “sudden and accidental” and “absolute” exclusions in
the same products-liability coverage case. 37
34 Letter of Sept. 21, 2000, from C. Noel Wertz, Senior Attorney, LDI, to Michael L. Vetter,
ISO, regarding ISO Filing No. GL 99-099FO Louisiana.
35 Thus, the LDI stated that, “notwithstanding erroneous court decisions, ISO is well aware that
such occurrences are not pollution incidences as originally contemplated” in the mid-1980s. Id.
36 ISO confirmed in a seminar in 1985 that these premises and other ordinary risks remained
covered notwithstanding addition of the APE. Insurance Coverage Litigation § 15.07[C], at 15-
101.
37
See, e.g., Bituminous Cas. Corp. v. Advance Adhesive Tech., Inc., 73 F.3d 335, 338, reh=g
denied, 85 F.3d 645 (11th Cir. 1996) (applying Georgia law); Stoney Run Co. v. Prudential-LMI
(Cont’d . . .)
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