Claim for Home’s Loss Due to Accumulation of Bat Guano Barred by Pollution Exclusion Clause

Joel and Evelyn Hirschhorn owned a vacation home in Wisconsin that was covered by a homeowners insurance policy that insured the home, along with structures and personal property located at the insured property, against “accidental direct physical loss.” It also contained a pollution exclusion clause that excluded from coverage any loss “resulting directly or indirectly from: … discharge, release, escape, seepage, migration or dispersal of pollutants….” The policy, in turn, defined “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, liquids, gases and waste.”

After the Hirschhorns noticed an odor emanating from their vacation home, a contractor determined that the cause was the accumulation of bat guano between the home’s siding and walls. Their insurer denied their claim on the ground that “[b]at guano is considered a pollutant.” The Hirschhorns then sued their insurer for breach of contract and bad faith. They alleged that their home had become uninhabitable and unsaleable as a result of the accumulation of bat guano between the home’s siding and walls, and they claimed that their insurer was liable for its total loss.

The insurer moved for summary judgment, and the trial court found that the insurance policy’s pollution exclusion clause excluded coverage for the Hirschhorns’ loss. The court of appeals reversed, deciding that the pollution exclusion clause was ambiguous and therefore had to be construed in favor of coverage. The insurer appealed.

The Wisconsin Supreme Court reversed the decision of the court of appeals, concluding that the pollution exclusion clause excluded coverage for the loss that allegedly resulted from the accumulation of bat guano.

The court first found that bat guano fell unambiguously within the policy’s definition of “pollutants.” Second, the court decided that the Hirschhorns’ alleged loss resulted from the “discharge, release, escape, seepage, migration or dispersal” of bat guano under the plain terms of the policy’s pollution exclusion clause. Accordingly, it concluded, the trial court had properly dismissed the Hirschhorns’ complaint against their insurer. The case is Hirschhorn v. Auto-Owners Ins. Co., No. 2009AP2768 (Wisc. March 6, 2012).

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