Pollution Exclusions in Insurance Policies Cannot Be Presumed to Be Ambiguous or Limited

In Whitney v. Vermont Mutual Insurance Company, 2015 VT 140 (December 11, 2015), the Vermont Supreme Court considered whether damage caused by a bed bug pesticide was excluded under the “pollution exclusion” in the Plaintiffs’ homeowners’ insurance policy.

Issue: Whether the pollution exclusion in Plaintiffs’ homeowner’s insurance policy was ambiguous such that they were entitled to coverage under for damage caused by bed bug pesticides.

Holding: The Court reversed the trial court’s grant of summary judgment to Plaintiffs, which construed ambiguity in the policy’s pollution exclusion in favor of coverage. The Court that under another recent case (Cincinnati Specialty Underwriters Insurance Co. v. Energy Wise Homes, Inc., 2015 VT 52), pollution exclusions are no longer presumed as a class to be ambiguous or limited to traditional environmental pollution. Instead, the Court reviewed the language of the pollution exclusion de novo, found it to be unambiguous that the beg bug pesticide was a pollutant under the policy language, and therefore found that damage caused by the pesticide was excluded from coverage.