Frimpong noted that Lexington and Starr are part of an insurance program incorporating several insurance policies purchased by Segerstrom, which provide up to $5 million in “Special Time Element” coverage that insures losses sustained from the “cancellation … [or] interference with the business” as a result of contagious or infectious disease, including those losses resulting from the outbreak of a contagious or infectious disease within a 10-mile radius of the insured location.
The policies also state that they cover the “closing of the whole or part of the premises of the insured either by the insured or by order of a public authority consequent upon the existence or threat of hazardous conditions either actual or suspected at an insured location.” While the policy has an exclusion for “pollution and contamination”, the judge determined that it was ambiguous and required to be construed in favor of Segerstrom and against Lexington.
The judge cited Mackinnon v. Truckers Insurance Exchange, in which the California Supreme Court looked at a similar “pollution” exclusion in a case related to the use of a pesticide at a residential property, in which the court said it was “far from clear” that pesticides “would be commonly thought of as pollution” and so the coverage was not precluded.
