After a couple decades as an insurance archeologist, I find that my business clients too often take their commercial general liability insurance policies at face value. The word has been out for some time that old business insurance policies are valuable, but as to their actual value, it is best not to trust your own eyes.

As businesses encounter environmental damage claims, they do internal searches for old policies and hire insurance archeologists to hunt down the ones they cannot find. Too often though, they attempt to interpret the policies they find by a literal reading of the policy language. Given the long history of insurance coverage litigation in the United States, this is certainly not a wise decision. Contacting an insurance coverage attorney is the recommended means of interpreting these policies and filing claims.

A literal reading of the sudden and accidental pollution exclusion in a 1970’s general liability insurance policy might lead the average business person to believe that there is no coverage for the gradual leakage of pollutants into soil and ground water at his place of business. However, if that place of business was in Alabama, Georgia, Illinois, Kentucky, New Jersey, Pennsylvania, Rhode Island, Wisconsin, West Virginia or the District of Columbia, a literal reading of the policy language will be misleading. That is because the courts in these states have used the doctrine of “regulatory estoppel” to interpret policy language, and by doing so, they have sometimes found coverage for gradual pollution in policies before thought to exclude it.

Perhaps the most famous of these “regulatory estoppel” doctrine interpretations has been that of the New Jersey Supreme Court in the case styled, Morton International Inc., v. General Accident Insurance Company of America. This case was decided fifteen years ago and has been persuasive in causing other states’ courts to use their state’s history of approving the insurance industry’s policy language changes when determining the meaning of the pollution exclusion. The Morton court looked at memoranda submitted by the Insurance Rating Board to state insurance regulators in 1970 and determined that the sudden and accidental pollution exclusionary language featured in the insurance industry’s proposed changes to its standard CGL policy were not the restriction of coverage that the insurance industry now claimed it was. Rather, the change in language was suggested at that time as an explanation of coverage for gradual pollution that had existed since 1966. Therefore, the court determined that the insurer was “estopped” from claiming that the “sudden and accidental” language excluded coverage for gradual pollution under these policies.

Add the states employing the “regulatory estoppel doctrine” in interpreting policy language to those which have found pollution exclusionary language to be “ambiguous” (Indiana for instance) and you can see how a knowledge of state law is absolutely essential to the interpretation of your old insurance policies in many states. Contacting a coverage attorney will help you determine when case law and not common sense is the right way to proceed.