In a recent legal decision that reinforces existing case law in Indiana, Judge Jon E. DeGuilio of the U.S. District Court for the Northern District of Indiana (Hammond Division) ruled in favor of a policy holder in an environmental contamination coverage dispute.
Old Republic Insurance Company v. Gary/Chicago International Airport Authority (No. 2:15-CV-281-JD) saw Old Republic seeking declaratory relief and reimbursement from the Airport Authority for defense costs expended in defending the Airport Authority against IDEM’s claims for investigation and cleanup of fifty-two separate different contaminants.
Old Republic argued that its non-specific pollution exclusion (which read “This policy does not cover claims directly or indirectly occasioned by, happening through or in consequence of:…(b) pollution and contamination of any kind whatsoever,” was distinguishable from language Indiana courts had previously identified as ambiguous (under Indiana law, which interprets insurance contracts as it would any other, ambiguity in coverage exclusions must be interpreted in a way that finds for coverage).
Although different than the absolute pollution exclusion by means of excluding “pollution” and “contamination” rather than the language found in American States v. Kiger 662 N.E.2d 945 (Ind. 1996) and its progeny, “pollutants and contaminants,” the district court was not convinced that the minor modification of the language was sufficient to overcome the Indiana Supreme Court’s approach. In the view of the Indiana Supreme Court, in the event that an insurer wishes to exclude coverage, it must specifically exclude the substances for which it would negate coverage; a moderate change of broad exclusionary language is insufficient to resolve the ambiguity Kiger and its progeny identified and held against its drafters.
Although Indiana is unique in the stringency of its courts’ identification of ambiguity in commercial general liability insurance contracts, this most recent decision simply adds another layer to the stratifying case law requiring insurance contracts to specifically identify hazards against which they will not insure.