Emerging Issues Regarding Liability Insurance and Genetically Modified Organisms

November 2011
The Insurance Coverage Law Bulletin
The coverage issues surrounding losses caused by environmental pollution have been litigated for decades. Yet, no matter how many permutations of disputes take place over what constitutes "pollution" within the meaning of the pollution exclusions in comprehensive general liability ("CGL") policies, new issues continue to arise. One issue poised to become significant is whether damage allegedly caused by genetically modified organisms ("GMO") is within the ambit of the absolute pollution exclusion currently in effect. That exclusion, as set forth in the standard form policy published by Insurance Services Office, Inc., provides that CGL coverage does not apply to: "‘Bodily injury’ or ‘property damage’ arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants,’" with "pollutants" defined as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste … " At least one insurance carrier, however, has defined "pollutants" expressly also to include "genetically engineered materials." See, e.g., Bechtel Petroleum Operations, Inc. v. Cont’l Ins. Co., 2006 WL 531277 (Cal. App. 2d Dist. Mar. 6, 2006). Other issues that have been litigated in the context of traditional environmental liability and mass tort claims are also relevant to potential GMO claims, including whether the alleged harm was expected or intended by the policyholder, and whether the alleged harm constitutes a single occurrence or multiple occurrences.