Earlier this month, Washington confirmed the Supreme Court's coverage for damage to carbon monoxide and claims that an insurer acted in bad faith when mistakenly invoked an absolute exclusion of pollution to deny coverage for a trial involving alleged carbon monoxide gas emissions inside a home.
After a previous decision by a third panel, the Supreme Court confirmed in a banc rehearing that its previous judgment established that "absolute contamination of exclusion" ("APE") was correct. I Xia v. ProBuilder's Specialty Insurance Co. RRG No. 92436-8 (laundry April 27, 2017) asked the insurer the Supreme Court to clarify the application of an APE to a homeowner's claim arising from negligent installation of a water heater that led to emissions of carbon monoxide gas. In a split decision that "confirms [ed] the importance of investigating and understanding the cause chain of events leading to damage and harm," the majority of the policyholder decided based on the "effective presence" rule, according to which the Initial event in a causal chain is a covered risk, then the coverage applies regardless of whether subsequent undefined events within the chain are excluded by the policy, even if such detected events are the actual cause of the alleged loss.
In Xia although the court acknowledged the insurer's argument of alleged "pollution", it also claimed that the insurer could not ignore the existence of a covered risk (ie, the negligible installation) which was the effective nearby cause of it alleged loss. As a consequence, the majority of the Court's judgment for the insurer and ordered the ruling of the policyholder for breach of contract and unlawful claims.
The statement has received a great deal of attention in the insurance circles, especially with regard to the court's use of an "effective attendance rule" in the case of liability insurance, even when the facts can support an insurer's argument regarding the applicability of an APE risk in the chain of events leading to the alleged loss. The Court's one-banc decision leaves the site of three judges confirming the coverage of non-industrial pollution claims, even though there is an APE in the insurance policy.
This decision confirms that APE is intended to comply with insurance representations at the time it was written and presented for approval by governmental insurance commissions ̵