Indiana Court of Appeals Rules Insurance Policy’s Lead Exclusion Unambiguously Barred Coverage

Michael R. Giordano

Indiana Farmers Mut. Ins. Co. v. HomeWorks Management Corp., 2022 WL 17825975 (Ind. Ct. App. 2022)

Parents claimed their children suffered respiratory problems because of lead-based paint and dust in the home they rented. The parents filed a lawsuit against the management company and owners of the rental home. The owners submitted a claim to their insurer seeking liability coverage for the defense of the claim.  The liability insurer filed a declaratory judgment complaint contending it owed no liability coverage to the owners based upon the policy’s lead exclusion, which barred coverage for any “actual or alleged, threatened, or suspected ‘bodily injury’… arising out of ‘asbestos’ or ‘lead.’” The exclusion goes on to further specify the various types of lead-related claims that were excluded.

At the trial court level, the liability insurer’s motion for summary judgment was denied and the owners’ motion was granted. But the Court of Appeals reversed and rejected the owners’ argument that the lead exclusion was so overbroad that it was ambiguous and vague.

They offered as examples that an insurer could exclude coverage for “an accidental discharge of a firearm if the bullet contained 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.” The Court of Appeals rejected this argument and found that the lead exclusion was neither vague nor ambiguous because it was specific, both in defining “lead” and in specifying the bar of coverage applied to claims “arising out of . . . lead.” Unlike the hypotheticals provided by the owners, the Court of Appeals observed, the exclusion required a causal connection between the “lead” and the liability claim asserted.

Because the claims against the owners alleged injuries resulting from lead poisoning, the Court of Appeals reversed the trial court and entered summary judgment for the insurer. In doing so, the Court of Appeals addressed and rejected the owners’ attempt to compare the lead exclusion to Indiana’s case law interpreting the “pollution exclusion” in an insurance policy. The Court noted that in those cases where the courts found the pollution exclusion to be ambiguous, the policy defined “pollutant” so broadly that it could include almost any substance. In this case, the Court found that the term “lead” was not ambiguous and was clearly defined by the policy. Thus, the Court of Appeals held that the exclusion was enforceable.

Insurers are often criticized as not being specific within the definitions and exclusions contained in their policies. This case provides a good example of where the policy provided definitions that were specific and not considered vague and ambiguous in excluding certain claims as being covered.