On March 30, 2015, the Court of Appeals of Georgia held that lead-based paint did not qualify as a pollutant for purposes of a standard pollution exclusion in a commercial general liability (CGL) policy, resolving a matter of first impression in Georgia. The decision in that case, Smith v. Ga. Farm Bureau Mut. Ins. Co., 2015 Ga. App. LEXIS 247 (Ga. Ct. App. March 30, 2015), reinforces the requirement that to be effective, exclusions in insurance agreements, such as CGL policies, must clearly specify which risks are excluded.
Amy Smith sued her landlord, alleging that her daughter suffered severe injuries from ingesting lead- based paint chips or dust at the landlord’s rental property. Based on the relevant pollution exclusion, Georgia Farm Bureau (GFB), the landlord’s insurer, filed a declaratory judgment action seeking a ruling that its policy did not require GFB to defend or indemnify the landlord for Smith’s lawsuit.
The GFB policy’s pollution exclusion clause excluded coverage for bodily injury claims “arising out of the actual, alleged or threatened discharge, dispersal . . . release or escape of ‘pollutants.’ ” The principal issue was whether lead-based paint qualified as a “pollutant,” which the policy defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.” Agreeing that the pollution exclusion applied, the trial court granted summary judgment to GFB. Smith and the landlord appealed.
Analysis and Holding
The Court of Appeals of Georgia began its analysis by repeating several tenets of policy interpretation under Georgia law, including the well-settled principle that “[e]xclusions from coverage in insurance policies require narrow construction on the theory that the insurer, having affirmatively expressed coverage through broad promises, assumes a duty to define any limitation on the coverage in clear and explicit terms.” Applying these principles, the court reversed summary judgment for GFB and held that, because “lead-based paint is not clearly a ‘pollutant’ as defined by the policy,” Smith’s claims were not excluded by the pollution exclusion.
Although the author of the court’s opinion stated that an insurer must specifically exclude lead-based paint injuries from coverage to avoid liability from lead-based paint injuries, the other judges on the panel did not join that portion of the opinion. Judge McMillian, in a special concurrence, noted that “it has never been the law in [Georgia] that a pollution exclusion clause in an insurance contract must specifically list the exact pollutant in order for the clause to exclude coverage.”
The Smith decision reiterates that under Georgia law, the language of an exclusion must be free of ambiguities to relieve an insurer of its duties to defend and indemnify an insured. Especially with respect to pollution exclusions, Smith also reaffirms that Georgia courts often will reject insurers’ policy interpretations if presented with a reasonable alternative interpretation in favor of the insured. However, the panel’s disagreement about whether an insurer must specifically list an excluded pollutant likely will result in further litigation about this issue in the future.