In a New Orleans case a trial judge entered an order on March 26, holding the pollution exclusion in a homeowners insurance policy does not apply to damage done by Chinese drywall.  In holding that the exclusion does not apply the court noted

The POL [pollution and contamination] exclusion does not and was never intended, to apply to residential homeowners claims for damages caused by substandard building materials.  The Louisiana Department of Insurance determined that a ‘pollution incident’ under a pollution exclusion in homeowners’ policies only refers to an incident which causes ‘environmental damage,’ or ‘injurious [to the environment, not the claimant] presence in and upon the land, the atmosphere, or any watercourse or body of water of solid, liquid, gaseous or thermal contaminants, irritants or pollutants.’  [citation omitted].

The fact that Chinese drywall releases various gases into the home is not sufficient to qualify as a ‘pollutant’ under the pollution exclusion….

A copy of the Court’s ruling can be downloaded by clicking here

I believe that the case – Finger v. Audubon Insurance Company – is the first ruling in the country by a court on this important issue. 

The court also found that the "Gradual or Sudden Loss" and "Faulty, Inadequate of Defective Planning" exclusions did not apply to preclude coverage.  In rejecting these exclusions, the Court noted that that "rust or other corrosion" as well as the "inherent vice" or "latent defect" language of the exclusions did not bar recovery.  I previously blogged on the applicability of the deterioration and corrosion exclusions which can be accessed by clicking here.

As an attorney, representing homeowners and business owners in cases involving damage to their homes caused by Chinese Drywall, this case is a welcome piece of good news.  The lawyers for the Fingers is to be commended for an outstanding job.