Pollution Exclusion

The absolute pollution exclusion, found in ISO form CG 00 01 (Section I, Exclusion f), is one of the broadest exclusions in the commercial general liability policy. It bars coverage for claims arising from pollutants, which the policy defines as any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. For apartment owners, this exclusion has far-reaching implications that extend well beyond industrial contamination scenarios.

Common apartment-related pollution claims include mold remediation after water intrusion, carbon monoxide poisoning from faulty furnaces or water heaters, lead paint exposure in buildings constructed before 1978, asbestos disturbance during renovation, fuel oil or heating oil tank leaks, and sewage backups that contaminate occupied units. All of these scenarios can trigger the pollution exclusion, leaving the apartment owner without liability coverage for resulting bodily injury or property damage claims. Some courts have interpreted the pollution exclusion narrowly in residential contexts, but the trend in most jurisdictions favors the insurer's broad reading.

Apartment owners should address the pollution exclusion gap through a standalone environmental or pollution liability policy. These policies cover both first-party cleanup costs and third-party bodily injury and property damage claims arising from pollution conditions on the insured property. For older apartment buildings with known or suspected environmental issues—underground storage tanks, lead paint, asbestos-containing materials—pollution liability coverage is essential. Fannie Mae and Freddie Mac guidelines require environmental assessments and may mandate pollution coverage as a loan condition for properties with identified environmental risks.