Environmental Business Alert: Insurance Update

Date: Dec 15, 2009

Michigan Court of Appeals Rules That a Pesticide is NOT Always a Pollutant Under the Pollution Exclusion Provision of a Commercial General Liability Policy

Members of the chemical industry should take note that not all pesticides or pesticide-containing products will be deemed pollutants under the absolute pollution exclusion provisions of liability insurance policies. As such, insurers in Michigan may have a duty to defend an insured against claims that a pesticide used by the insured caused harm to a third-party.

In Hastings Mutual Insurance Company v. Safety King, Incorporated, the insurance company, was obligated to defend its insured, Safety King, when homeowners brought suit against Safety King for damages stemming from the use of a triclosan-containing sanitizing agent during duct-cleaning work at their home. No. 286392, Mich. App., 1st Dist.; 2009 Mich. App. LEXIS 2448 (Nov. 24, 2009). Though Hastings argued that a pollution exclusion clause signed by Safety King negated coverage otherwise provided, the court ruled that the pollution exclusion clause did not apply to triclosan because triclosan was not a "pollutant" as defined under the policy. To be considered a pollutant, the court reasoned that the substance had to be an irritant or contaminant, meaning that the substance had to cause harmful effects to people, property, or the environment or had to appear somewhere it would not normally appear and cause harm to human health or the environment. Because triclosan was used in personal hygiene products, was not expected to cause harmful effects to people or to the environment, and was found where it was meant to be applied (e.g., the duct work), Hastings could not show that triclosan was a pollutant. Hastings, therefore, had a duty to defend Safety King in the action brought against it.

The full Hastings opinion can be found at: http://coa.courts.mi.gov/documents/OPINIONS/FINAL/COA/20091124_C286392_35_286392.OPN.PDF

For more information, please contact: David Sarvadi at sarvadi@khlaw.com or 202-434-4249 or, or Arthur Garrett at garrett@khlaw.com or 202-434-4248.

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Environmental Business Alert - Insurance Update