No Insurance Policy Covers Every Risk of Loss
Barry Zalma
Mar 22, 2024
Read the full article at https://lnkd.in/gbZU78W9, see the full video at https://lnkd.in/gk-N8X-p and at https://lnkd.in/gTGqXwY2 and at https://zalma.com/blog plus more than 4750 posts.
Post 4760
Pollution Exclusions Deter Polluters
In the world of business, corporations obtain commercial insurance to protect their assets, and commercial insurers customarily include exclusion provisions in their policies. Exclusion provisions dispel the notion that insurance coverage is without limits and place the insured on notice about actions or omissions that will trigger an insurer’s denial of coverage. Insurance policies that include pollution exclusion provisions accomplish even more.
In Gold Coast Commodities, Incorporated v. Travelers Casualty and Surety Company of America, No. 23-60087, United States Court of Appeals, Fifth Circuit (March 18, 2024) the Fifth Circuit established the reason for a pollution exclusion.
An insurance policy’s pollution exclusion deters deliberate or negligent behavior that leads to environmental harm. When a court affirms a pollution exclusion the insured is prevented from coverage, the Fifth Circuit protect the insurer’s right to disincentivize corporations from engaging in bad faith actions with a known environmental impact. This case arises from claims asserted against an insured and, due to a pollution exclusion, those claims fall outside the insurance policy’s reach.
BACKGROUND
Gold Coast Commodities, Inc. (“Gold Coast”) is a business corporation located in Rankin County, Mississippi. Gold Coast converts used cooking oil and vegetable by-products into animal feed ingredients. Gold Coast became insured under Travelers Casualty and Surety Company of America (“Travelers”), Policy.
In July 2018, the City of Brandon filed suit in the Circuit Court of Rankin County against Gold Coast and its principals alleging that Gold Coast dumped “significant amounts of high-temperature, corrosive, low-pH wastewater into the City’s sewer system.” These actions or omissions are alleged to have occurred during the Policy period. The City of Brandon seeks to recover for damages from negligence resulting from the “discharge” or “release” of “pollutants” as the term “pollutants” is defined in the Policy.
In June 2021, adding to Gold Coast’s problems the City of Jackson filed suit in the Circuit Court of Hinds County against Gold Coast and its principals alleging that Gold Coast dumped “high temperature and corrosive” industrial waste into the City’s sewer system.
Travelers denied coverage for defense or indemnity of the two suits and Travelers cited the Policy’s pollution exclusion as the basis for its denial of coverage.
Travelers filed a Motion for Partial Summary Judgment arguing that it had no duty to defend Gold Coast and its principals in the respective lawsuits and Gold Coast filed a Motion for Partial Judgment on the Pleadings arguing that: (1) Travelers has the duty to defend Gold Coast and its principals in the respective lawsuits; and (2) Travelers has a duty to reimburse Gold Coast and its principals for their defense costs.
The district court denied Gold Coast’s Motions for Partial Judgment on the Pleadings and granted Travelers’ Motion for Partial Summary.
DISCUSSION
An insurance company’s duty to defend its insured is triggered when it becomes aware that a complaint has been filed which contains reasonable, plausible allegations of conduct covered by the policy. No duty to defend arises when the claims fall outside the policy’s coverage. Exclusionary clauses are strictly interpreted and the language within them must be clear and unmistakable.
The district court concluded that all the claims in the complaints were clearly and unambiguously excluded from coverage based on the Policy’s pollution exclusion.
The Fifth Circuit concluded that the language unambiguously excluded Gold Coast’s actions.
A substance is an irritant or contaminant at its core when no matter where it is, how it is contained, or whether it is in contact with something it is an irritant or contaminant. A substance can become an irritant or contaminant when it comes into contact with something and is actively irritating or contaminating it.
“The allegations in both the City of Brandon’s and the City of Jackson’s complaints present facts that are paradigmatic for the application of the Policy pollution exclusion.”
The deliberate discharge of toxic industrial waste is precisely the type of activity to which Traveler’s Policy pollution exclusion was intended to apply. There is not a reasonable interpretation of the wastewater’s form or qualities that would conclude that it was not an irritant or contaminant. Therefore, the Fifth Circuit concluded that the Policy is not ambiguous. Because the Policy is not ambiguous, the claims are excluded from coverage.
Gold Coast, therefore, did not sufficiently plead facts that trigger Traveler’s duty to defend and the District Court’s decision was affirmed.
ZALMA OPINION
The Fifth Circuit established one of the important reasons for exclusions in insurance policies like that issued to Gold Coast by the Travelers. Exclusion provisions are present to reveal to insureds that insurance coverage is limited and place the insured on notice about actions or omissions that will trigger an insurer’s denial of coverage. Insurance policies that include pollution exclusion provisions accomplish even more because they deter wrongful conduct. Gold Coast learned that lesson the hard way: it must pay for defense of the lawsuits and pay from its assets the tort damages.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to my substack at https://lnkd.in/gcZKhG6g
Go to X @bzalma; Go to the Insurance Claims Library – https://lnkd.in/gwEYk
The Professional Claims Handler
Post 5218
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-8-barry-zalma-esq-cfe-zdwsc, see the full video at https://rumble.com/v70zl4s-the-zalma-philosophy-of-claims-handling-part-8.html and at https://youtu.be/MIYcF71ffRQ, and at https://zalma.com/blog plus more than 5200 posts.
Claims Commandment X – Thou Shall Not Pretend to be a Lawyer
Some experienced and professional claims people know the law in their area of expertise better than most lawyers.
Adjusters should be adjusters and leave lawyering to lawyers. Similarly, lawyers should be lawyers and never try to be adjusters.
Claims Commandment XI – Thou Shall Empathize With the Claimant
Everyone presenting a claim is unhappy, disturbed, shocked, injured and needs help.
Empathy is identification with and understanding of another’s situation, feelings, and motives. It is the ability to understand another person’s circumstances, point of view, thoughts, and feelings....
HOW TO CREATE AN EXCELLENCE IN CLAIMS HANDLING PROGRAM
See the full video at https://rumble.com/v70wb2i-the-zalma-philosophy-of-claims-handling-part-6.html and at https://youtu.be/tL5nDKPEs40 and at https://zalma.com/blog plus more than 5200 posts.
Post 5217
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
An Excellence in Claims Handling program begins with a statement in the insurer’s claims manual or statement of professionalism that it is dedicated to providing excellence in claims handling to every insured who presents a claim.
The excellence in claims handling program should include, at a minimum:
A series of lectures supported by text materials explaining:
A definition of insurance.
How to read and understand an insurance policy.
How to interview an insured, witness, or claimant.
How to assist an insured in the insured’s obligation to ...
The Professional Claims Handler
Post 5216
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-5-barry-zalma-esq-cfe-jde8c, see the full video at https://rumble.com/v70q4x8-the-zalma-philosophy-of-claims-handling-part-5.html and at https://youtu.be/6b9tZQsEkB4, and at https://zalma.com/blog plus more than 5200 posts.
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
Standards to be a Professional Claims Adjuster
The Insurance claims professional should be a person who:
1. Can read and understand the insurance policies issued by the insurer.
2. Understands the promises made by the policy.
3. Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
4. Are competent investigators.
5. Have empathy and recognize the difference between empathy and sympathy.
6. ...
The Professional Claims Handler
Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
How to Create Claims Professionals
To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
