The appellant insurer appealed a decision declaring it had a duty to defend and indemnify the respondent insured for claims arising from a carbon monoxide leak in the insured's apartment building.
The insurer argued that the absolute pollution liability exclusion in the commercial general liability policy barred coverage.
The Court of Appeal dismissed the appeal, holding that the exclusion clause was intended to apply to traditional environmental pollution, not to routine commercial hazards like a faulty furnace causing indoor carbon monoxide poisoning.
The court emphasized that exclusion clauses must be interpreted narrowly and in a manner consistent with the main purpose of the insurance coverage and the reasonable expectations of the policyholder.
