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State Automobile Mutual Insurance Co. v. Flexdar, Inc.

ELR Citation: 42 ELR 20077
Nos. 49S02-1104-PL-199, (Ind., 03/22/2012)

The Indiana Supreme Court held that an insurance company must provide coverage to a manufacturer for TCE contamination even though the policy contained an absolute pollution exclusion clause. The pollution exclusion clause excluded coverage for losses resulting from "pollutants," which the policy defined as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste." Indiana courts have consistently required that language in a pollution exclusion clause be explicit. Here, however, practically every substance would qualify as a "pollutant" under the policy, rendering the exclusion meaningless. Because Indiana case law has consistently refused to apply a pollution exclusion like the one at issue in this case on grounds of ambiguity, the clause must be construed in favor of the insured.