Surplus Line Insurance Policies do not Cover Air Borne Exposures

In Cincinnati Specialty Underwriters Insurance Co. v. Energy Wise Homes, Inc. et al, 2015 VT 52 (April 3, 2015), the Vermont Supreme Court held that the pollutant exclusion in surplus line insurance policies included airborne exposures.

Issue: Insurer appealed on the question of whether the exclusion for “pollutants” in their surplus line policy was limited to environmental pollution.

Holding: The Vermont Supreme Court reversed and remanded with instructions to enter judgment in insurer’s favor. After a review of the history of pollution exceptions and case law in other states, the Court held that the “pollutant” exception was not limited to environmental pollution. The policy language clearly and unambiguous excluded airborne exposure when spray foam is installed. It noted that its decision was limited to surplus lines insurers.

Dissent: Morris, Supr. J. (ret) filed a lengthy dissent, finding the policy language ambiguous and holding that the insurer failed to establish causation.