Opinion ID: 1448289
Heading Depth: 1
Heading Rank: 5

Heading: The National Union and NPIC Insurance Policy Pollution Exclusions

Text: The National Union policy pollution exclusion eliminates coverage for `property damage' arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants, which are defined to include smoke and soot. National Union's policy also contains a hostile fire endorsement, entitled Amendment of Pollution Exclusion: [The pollution exclusion provisions] do not apply to `bodily injury' or `property damage' caused by heat, smoke or fumes from a hostile fire. As used in this exclusion, a hostile fire means one which becomes uncontrollable or breaks out from where it was intended to be. (Emphasis added.) The parties agree that the fire in Portal A was hostile. NPIC admits that liability for heat or combustion damage from a hostile fire would be covered under NPIC's general liability policy provisions, but claims its pollution exclusion precludes coverage for smoke damage. The concepts of friendly fire and hostile fire are discussed in Youse v. Employers Fire Ins. Co., 172 Kan. 111, 117, 238 P.2d 472 (1951). In seeking to avoid liability on the ground that the injury is covered under an exception to the general terms of its policy, NPIC has the burden of proving facts bringing this case within the exception. Baugher v. Hartford Fire Ins. Co., 214 Kan. 891, Syl. ¶ 4, 522 P.2d 401 (1974). The NPIC policy contains several pollution exclusions. NPIC relies on Endorsement No. 5, which provides in part: It is our intent to exclude any and all coverage for any claim, suit, liability, defense costs, expenses and settlement arising directly or indirectly out of pollution whether or not the pollution was sudden, accidental, gradual, intended, expected, unexpected, preventable or not preventable. Endorsement No. 5 also defines smoke as a pollutant. The NPIC policy contains no hostile fire amendment. This case focuses on NPIC's Coverage A, entitled Excess Follow Form Liability Over Claims Made or Occurrence Coverage, which applies to damages in excess of the total Limits of Liability of Underlying Insurance as stated in the Schedule of Underlying Insurance. The Schedule of Underlying Insurance lists the National Union policy with a liability limit of $1 million for commercial general liability coverage per Occurrence.