Pollution exclusion in homeowner's policy may not apply to circumstances where sound insulation releases noxious gas that renders the home uninhabitable.

[2014] O.J. No. 487

2014 ONSC 761

Ontario Superior Court of Justice

A.D. Grace J.

January 31, 2014

The plaintiff insureds purchased a homeowner's policy from the defendant insurer. In their claim against the insurer, the insureds alleged that they undertook extensive renovations to their home which included the installation of a media room. They alleged that the sound insulation material that was used contaminated the home and rendered it uninhabitable. They sought indemnity under their homeowner's policy. The insured denied coverage on the basis that the policy does not respond to the alleged loss. The insurer relied, among other things, on the pollution exclusion.

The insureds sought a determination of a question of law after the close of pleadings. They asked the Court to decide whether the pollution exclusion applies to the claim as plead. The insurer asked the Court to find that the relevant pollution exclusion clause could apply and therefore to dismiss the motion.

The Court reviewed the pollution exclusion and judicial treatment of the pollution exclusion in other decisions. The Court concluded on the pleadings that the release of noxious gas was unexpected and may have been sudden. It was not clear to the Court that the pollution exclusion was intended to exclude coverage for this type of pollution. The Court found that the insurer had not proven on a balance of probabilities that the pollution exclusion applies to the facts as plead in the claim. Accordingly, the motion was granted.