Insurance Issues – Contamination – Part IV
The assured argued that “contaminate” meant introducing foreign subÂstance thus effectively creating a different substance. It conceded, however, that a product is also referred to as contaminated when the foreign substance merely injures its usefulness without affecting the original physical characterÂistics. It was argued that this created an ambiguity and therefore the policy should be read in favour of the assured. However, the court decided that if contamination had two equally familiar meanings then the clause excluded loss caused by the substance being materially altered by contamination and also where the usefulness of the property has been affected by the introduction of a foreign substance, and found against the assured.
It is often a fine distinction to draw between whether the proximate cause is in fact the contamination of the insured property or the introduction of the foreign substance which may be caused by some accidental eventâhence, the addition of the provision to some contamination and pollution clauses as referred to above. In the the case of RaybestosâManhattan Inc. v. Industrial Risk Insurers (1981), the assureds heptane tank was mistakenly filled with fuel oil creating a mix of fuel oil and heptane resulting in damage. The court found that, although contamination was excluded, the proximate cause of loss was in fact the unintentional filling of the tank with the wrong substance, which was not excluded even though the cause produced a loss by contaminating the tank.
Some of the contamination exclusions also make reference to a change in colour, flavour, texture or finish or, alternatively, it is an exclusion which stands alone. There is considerable overlap with these exclusions in that damage caused, for example, by a change in temperature may well also be excluded by the processing exclusion or even spontaneous combustion. Similarly, damage caused by change in flavour might also be excluded by contamination or the processing exclusion.
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