The Importance Of The Nature Of The Claim In Determining Coverage

Published date06 April 2022
Subject MatterEnvironment, Insurance, Litigation, Mediation & Arbitration, Environmental Law, Insurance Laws and Products, Professional Negligence, Clean Air / Pollution
Law FirmRogers Partners LLP
AuthorKayley Richardson

In Hemlow Estate v. Co-operators General Insurance Company, 2021 ONCA 908, the Ontario Court of Appeal dismissed an insurer's appeal of a coverage application decision, in which the application judge had held that the insurer had a duty to defend the insured.


Mr. Hemlow had been a sole proprietor who carried on business as a mechanical contractor, and held a valid policy of commercial general liability insurance with Co-operators.

In 2015, Hemlow was subcontracted by a company to carry out inspection services at a processing facility ("the Property"). During the course of his work, Hemlow was killed from exposure after opening a valve containing pressurized ammonia. The exposure also caused significant damage to the Property.

The owner of the property brought an action in negligence, nuisance, and breach of contract against the contractor and the Estate of Hemlow. Co-operators refused to defend the claim against the Estate based on the following "Total Pollution Exclusion" in Mr. Hemlow's insurance policy:

This insurance does not apply to:

1. Pollution Liability

a) "Bodily Injury" or "property damage" or "personal injury" arising out of the actual, alleged, potential or threatened spill, discharge, emission, dispersal, seepage, leakage, migration, release or escape of "pollutants".

The policy also contained the following definition of "Pollutants":

"Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant including smoke, odours, vapour, soot, fumes, acids, alkalis, chemicals and waste.

The Estate brought an application seeking a declaration that Co-operators had a duty to defend it in the property owner's action.

Application Judge's Reasons

In his decision dated January 29, 2021,1 the application judge found that Co-operators had a duty to defend the action because the word "Pollution" in the Total Pollution Exclusion was ambiguous, stating:

The pollution exclusion clause is worded to protect the insurer from liability for environmental pollution and the improper disposal or contamination of hazardous waste. It would have taken very little for a clause to be added in the Total Pollution Exclusion document signed by Mr. Hemlow to state that the exclusion is not limited to environmental claims, but also includes all claims arising from any emission of any of the enumerated substances.


The definition used by Co-operators of "Total Pollution Exclusion" was misleading in that it not only included an exclusion of...

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