SMITH v. GEORGIA FARM BUREAU MUTUAL INSURANCE COMPANY – FindLaw.

In a March 31, 2015 opinion, the Georgia Court of Appeals held that an absolute pollution exclusion provision in a CGL policy did not exclude coverage for alleged damages from lead-based paint. The Court’s analysis was based on the premise that “[p]olicies of insurance will be liberally construed in favor of the object to be accomplished, and conditions and provisions therein will be strictly construed against the insurer.” The court did not explicitly discuss the “traditional environmental pollution” test we’ve seen in other jurisdictions, although it did cite to a Maryland case, where the Courts do look at these clauses in those terms.

The Court distinguished  a 2008 case from the Georgia Supreme Court which held that carbon monoxide was a pollutant excluded by an absolute pollution exclusion clause. From the discussion, it appears that the Court is following the “traditional environmental pollution” test without explicitly calling it that. The “traditional environmental pollution” test is related to the “reasonable expectations” test (which the Georgia case does allude to), and essentially means that material which would traditionally be considered a “pollutant” – that is, which a reasonable insured would believe to be a pollutant – is excluded, but material that does not clearly fall in this category is not excluded.

An interesting subtext is that the majority opinion held: “if [the carrier] had intended to exclude injuries caused by lead-based paint from coverage in the policy at issue in this case, it was required, as the insurer that drafted the policy, to specifically exclude lead-based paint injuries from coverage.” This sounds familiar to Indiana opinions, which impose a very strict construction of the pollution exclusion clauses.