What is an Absolute Pollution Exclusion?

An absolute pollution exclusion is a liability insurance policy used by insurance companies to exclude coverage for liability for pollution that are caused by steady business operations. This is an insurance clause that removes coverage for pollution events and sometimes property damage that are attributed to regular business operations. Before the creation of absolute pollution exclusion, the provision of the 1973 CGL's standard pollution exclusion did not clearly maintain a stand on coverage for sudden and accidental events. The absolute pollution exclusion however removed such coverage. The absolute exclusion liability insurance policies became popular after 1986. This policy is an improvement on standard pollution exclusions, it removed coverage for sudden and accidental pollution incidents.

How Does the Absolute Pollution Exclusion Apply?

When insurance policies that entailed absolute pollution exclusions were created, insurance companies provide coverage for harmful and pollution events resulting from regular business operations. There were also many cases that arose from environmentally injurious materials and this drew the attention of the government of the day. Absolute pollution exclusions were created in response to how environmentally injurious materials were regulated or controlled by the government. For example, a California based company, Montrose Chemical Corporation which produced DDT (dichlorodiphenyl- trichloroethane) discharged the harmful materials resulting from their production into the Pacific Ocean causing water pollution. A lawsuit filed against the company required that they pay for the cleanup costs of the waste deposited, they however transferred the payment for the cleanup to insurance companies. This led to a gradual exclusion of coverage for pollution events by insurance companies before the absolute pollution exclusion became popular after 1986. The absolute pollution exclusion removed coverage for all pollution events include coverage for bodily injury, property damage and other damages caused by pollution events. However, there is a controversy on what exactly is considered pollution and the court addresses this issue. This is because insurers sometimes use the clause when they do not want to pay for certain claims. The explanation of what is considered pollution moot is also not captured in absolute pollution exclusion but addressed by courts. There are some exceptions to the absolute pollution exclusion, the common ones are;

• Bodily injury and property damage caused by an unintended escape of harmful materials such as fuel, fluids and other lubricants during business operations.
• Bodily injury sustained in a property owned and occupied by an insured and caused by pollution events from equipment used by occupants of the building or guests.
• Bodily or property damage in a facility owned or occupied by or rented to an insured resulting from pollution events, heat, smoke and fumes when an insured contractor is working.
• Bodily injury and property damage sustained in a building and caused by the escape of gases, fumes brought into the building in relation to an insured contractors work.