The Maryland Court of Appeals handed down a victory to the welding industry on Jan. 6 in a ruling that said business insurance pollution exclusion clauses do not apply to liabilities that may arise from the uses of welding rods.
"The economic impact of this decision on the welding industry cannot be overstated," Rick Doyle, executive director of the Gases and Welding Distributors Association, said in a news release. "Many of our members are mired in disputes with insurers over coverage for welding claims. The Maryland court recognized that insurance companies have an obligation to pay the costs to defend and resolve these claims," Doyle added. His comments were included in a news release from Dickstein Shapiro Morin & Oshinsky LLP, the Washington, D.C., law firm that represented Clendenin Brothers, Inc. in the case. Clendenin Brothers is a privately-held metal manufacturing company based in Baltimore.
The Maryland court limited the scope of the pollution exclusion clauses in typical business insurance policies to traditional environmental pollution, and said they do not encompass welding rod liability, and based its decision on the historical development of pollution exclusions.
The law firm said the court's ruling reaches beyond the insurer's obligation to defend its policyholder to encompass its obligation to indemnify Clendenin Brothers.
"This case is critical to any company facing insurer arguments that pollution exclusions in commercial general liability insurance policies preclude insurance coverage for non-traditional environmental liability," said Katherine J. Henry, an attorney at Dickstein Shapiro, "The broad and definitive ruling rejects insurers' unwarranted claims that pollution exclusions should be read broadly to eviscerate insurance coverage for normal industry activity."
Separately, Doyle said he sees the Maryland court's ruling setting a precedent for similar cases across the United States
"We have suggested that anyone who has been denied coverage (in similar circumstances) make their local counsels aware of this ruling. We consider this to be a very big victory," Doyle said.
The text of the court's ruling is available at www.gawda.org