Pekin Ins. Co. v. Pharmasyn, Inc. (Ill. Ct. App. Oct. 19, 2011)
An Illinois appellate court ruled last week that a policy’s pollution exclusion barred coverage to an insured organic compound maker for several personal injury lawsuits filed by individuals who either worked for or in the same building as the insured.
Several individuals filed suit against the insured, alleging that they were each occupants of a commercial building in which the insured, a producer of organic compounds, was located. The underlying complaint alleged that the plaintiffs were injured when the insured negligently allowed “dangerous and toxic substances, including, but not limited to, isocyanate chemicals” to be released “from open containers at the property, creating toxic fumes and seepage of hazardous material into the common areas, the environment, and into the premises occupied by the Plaintiffs.”
The insured tendered its defense and indemnity to its commercial general liability insurer, which agreed to defend pursuant to a reservation of rights. The insurer maintained, however, that coverage was excluded because the claims alleged “bodily injury” caused by pollution.
In the ensuing declaratory judgment action, the lower court agreed with the insurer’s position that the pollution exclusion barred coverage for the claims. The appellate court affirmed, finding that the policy’s exclusion for injuries resulting from the dispersion of a pollutant “[a]t or from any premises, site or location which is or was at any time owned or occupied by or rented or loaned to, any insured” applied. The court held that the policy language “at or from the premises” was not ambiguous and that the exclusion was sufficiently broad to bar coverage for pollution “at” the location of the insured’s business or pollution leaking “from” the location of the insured’s business. As a result, the court held that the insurer was not obligated to defend or indemnify the insured against the underlying personal injury actions.
For a copy of the decision, click here