In a recent decision, South Carolina Ins. Reserve Fund v. East Richland County Public Service Dist., 2016 WL 1125810 (S.C. App., filed 3/23/16), the Court found that the release of offensive odors constituted a pollutant because the odors involved gas and/or fumes. Other courts had reached similar conclusions. See, e.g., City of Spokane v. United National Ins. Co., 190 F.Supp.2d 1209, 1221 (E.D. Wash. 2002) (holding pollution exclusions “clearly and unambiguously” excluded coverage for losses related to odors emanating from a compost facility); Kruger Commodities, Inc. v. U.S. Fidelity and Guar., 923 F.Supp. 1474, 1479-80 (M.D. Ala. 1996) (finding a pollution exclusion applied to odors produced by an animal rendering plant even though the relevant chemicals were not hazardous and did not violate environmental laws); Wakefield Pork, Inc. v. Ram Mut. Ins. Co., 731 N.W.2d 154, 160 (Minn. Ct. App. 2007) (finding gases and odors emanating from manure at a nearby pig farm were excluded by the pollution exclusion as gases and fumes).
The Court also rejected the insured’s claim that the odors must be harmful in some way to be considered pollutants. The Court refused to impose such a limitation on the plain language of the policy exclusion and believed the fact that the odors were comprised of irritating and offensive gases suffices to demonstrate the odors are encompassed within the ordinary meaning of the pollution exclusion’s terminology.
The pollution exclusion in question had a sudden and accidental exception. In addressing the exception, the Court noted that the insured bears the burden of proving an exception to an exclusion. The Court found that “sudden and accidental” was synonymous with “unexpected.” With this finding in mind, the Court then found that the release of the offensive odors was part of the routine business operations of the insured and, therefore, not unexpected. The release of odors was not accidental and the exception did not apply.
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