Alaska Supreme Court Finds Carbon Monoxide is Not a Pollutant Excluding Coverage
In answering a certified question from the Ninth Circuit, the Alaska Supreme Court determined that an insured could reasonably expect coverage for injuries resulting form exposure to carbon monoxide from an improperly installed home applicance.
Josiah Wheeler rented a cabin owned by Deborah Overly and Terry Summers. While living in the cabin, Wheeler was found dead in the cabin's bathtub. An autopsy revealed that he died of acute carbon monoxide poisoning. An investigation found that a propane water heater, installed in the same room as the bathtub, had an exhaust flue unconnected to any external venting,
The cabin was covered under a homeowners policy issued by Garrison Property and Casualty Insurance Company. The policy excluded coverage for bodily injury or property damage "[a]rising out of the actual, alleged, or threatened discharge, dispersal, release, escape, seepage or migration of 'pollutants' however caused and whenever occurring." The policy further excluded bodily injury "[a]rising out of exposure to lead paint or other lead-based products" and "[a]rising out of exposer to asbestos."
Wheeler's estate and his parents sought an out-of-court settlement with the homeowners, Overly and Summers. Overly and Summers notified Garrison, which denied coverage because carbon monoxide was a "pollutant" under the policy. When sued, Overly and Summers signed a confession of judgment admitting that they negligently caused Wheeler's death. Overly an Summers assigned their right to proceed against 'Garrison for losses arising from Wheeler's death.
Wheeler's estate filed suit against Garrison. The district court entered judgment against the estate, determining that Overly and Summers could not have reasonably expected coverage. It reasoned that carbon monoxide fell within the policy's definition of "pollutant."
The estate appealed. The Ninth Circuit certified a question to the Alaska Supreme Court: Does the pollution exclusion in the homeowners policy bar coverage for injury arising out of exposure to carbon monoxide emitted by an improperly installed home appliance?
The Alaska Supreme Court considered how a reasonable insured would read the policy. The two exclusions that followed the pollution exclusion for lead paint and asbestos had a significant effect on how a reasonable insured would interpret the pollution exclusion. The express exclusions for exposure to these common household "pollutants" led support to a narrower interpretation of the pollution exclusion. A reasonable insured could infer from these specific exclusions that exposure to toxic substances found within the home did not fall within the pollution exclusion. Further, the asbestos and lead exclusions' use of the broad terms "exposure" contrasted with the six "movement" words in the pollution exclusion: "discharge, dispersal, release, escape, seepage or migration." The absence of an exclusion specifically mentioning carbon monoxide supported an insured's reasonable expectation that harm from exposure to carbon monoxide, which was also often found within the home and caused no harm absent a defect or failure, was not an excluded harm.
The court answered the certified question by stating that the pollution exclusion did not exclude coverage for injury arising out of exposure to carbon monoxide emitted by an improperly installed home appliance.
