Indiana insureds seeking coverage for environmental claims have long been the beneficiary of court decisions favoring the insured by holding that pollution exclusions are unenforceable in the State of Indiana. In the March 2012 State Auto. Mut. Ins. Co. v. Flexdar, Inc., 2012 Ind. LEXIS 47 (Ind. 2012) decision, the Indiana Supreme Court, applying a literal analysis of the pollution exclusion, found that practically all substances qualified as “pollutants” thus rendering the pollution exclusion in the policy meaningless. In the Flexdar dissenting opinion, it was noted that the majority’s opinion further moved Indiana law toward the proposition that “all pollution exclusions are unenforceable.”
The Flexdar decision relied on the precedent of prior Indiana case law (beginning with the Kiger decision in 1996) in reaching the conclusion that the pollution exclusion in the State Auto policy should be construed in favor of the insured. And, while we know that the pollution exclusion will continue to be tested by insurers and insureds alike, we do not know whether the next modification to the pollution exclusion will survive the Court’s scrutiny thereby limiting an insured’s right to recover. In an effort to avoid any limitation on an insured’s rights, prospective commercial real estate buyers and sellers should accelerate their actions to address possible environmental issues, especially former gas station, industrial and dry cleaner sites. Otherwise, such property owners’ recovery rights against their insurers may be limited.
If you have questions about an environmental matter, call on one of our experienced environmental law attorneys: Monica Edwards, Kent Brasseale, Michael E. DiRienzo or Mike Schopmeyer. Our attorneys take pride in professionally and cost-effectively steering our clients through the environmental remediation process. With most clients undergoing a remediation process, we succeed in obtaining the attorney and scientific fees incurred being paid by a funding from insurance, governmental or prior titleholders