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Vol. 12 - Issue 2

March 14, 2023

Indiana Appeals Court Rejects Insured’s Effort To Kigerize The Lead Exclusion


Those who handle pollution exclusion cases are aware of Indiana’s unique treatment of the issue.  

In 1996, the Supreme Court of Indiana, in Am. States Ins. Co. v. Kiger, held that, for the pollution exclusion to apply, the pollutant at issue must be explicitly stated.  Based on this, the court held that the pollution exclusion did not preclude coverage for claims for damages caused by the discharge of petroleum from an underground storage tank at a gas station.  

At issue in Indiana Farmers Mutual Inc. Co. v. Homeworks Management Corp., No. 22A-1232 (Ind. App. Ct. Dec. 21, 2022) was coverage for landlords/property owners for bodily injury suffered by tenants caused by exposure to lead paint dust. 

The insurer argued that its lead exclusion applied.  The insured, obviously knowing that it had an uphill battle, tried to give the policy’s lead exclusion the Kiger treatment.  It argued that “because [Indiana Farmers] chose to define ‘lead’ as anything that has lead in it, without any specificity, the exclusion is ambiguous and unenforceable.’  They emphasize the language in the Lead Exclusion that ‘[s]uch claims may include but are not limited to (emphasis added by court) those arising out of or resulting, in whole or in part, from’ certain situations, contend that the Lead Exclusion is expansive, ambiguous, and vague, and assert that Indiana Farmers could have explicitly limited the exclusion to ‘lead paint’ or ‘respirable lead compounds.’” 

As the insured saw it, the lead exclusion is so broad that “an insurer could exclude coverage for an accidental discharge of a firearm if the bullet contains lead, a hammer containing lead falling on a guest’s foot, or the death of an individual caused from smoke inhalation during a fire of a home containing lead.”

But the Indiana appeal courts rejected this effort to Kigerize the lead exclusion.  The general problem that Indiana courts have had with the pollution exclusion, the court pointed out, was the breadth of the definition of “pollutants” -- “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”

However, the Homeworks court concluded that the lead exclusion here did not suffer this same flaw: “[T]he Lead Exclusion did not use the general term ‘pollutants.’ Rather, it specifically mentioned lead. We conclude that the term ‘lead’ under the Lead Exclusion is unambiguous and does not contravene public policy or the case law regarding a general pollution exclusion.”




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