Knowing the scope of your insurance policy is key, especially when a personal injury has occurred. Many policies carry exclusions for events like flooding and actions such as pollution—and these exclusions serve to limit (or completely eliminate) the liability of insurance companies, even if the policyholder suffers an injury.

How broadly can an insurance policy’s pollution exclusion be read? That question was addressed in a recent case heard by the U.S. District Court for the District of Massachusetts.

In Arrowhead Indemnity Company v. Oxford Cleaners & Tailors, LLC, the federal court ruled that the insurer of Oxford Cleaners & Tailors had no duty to defend or indemnify the dry cleaning business for allegedly contaminating a neighboring property. The policy contained a clear pollution exclusion, but the policy holder argued that it did not apply to a “wrongful entry” onto a neighboring property.

The Court ruled that the environmental contamination, which resulted in elevated levels of solvents in groundwater samples, was not a tortious “wrongful entry” and, moreover, that the pollution exclusion in Part One of the policy would trump any coverage for personal injury for wrongful entry. Summary judgment was granted in favor of the insurer.

The Arrowhead decision is important because it demonstrates the broad application of a policy’s pollution exclusion to bar pollution-related claims, even claims that result in damages or personal injuries. Keep this in mind when reviewing your own insurance policy.

Please note: Berkowitz and Hanna LLC did not represent any parties in this case