Smoke Without Fire: Damage from Concrete Dust Covered by Insurance

You’ve heard, “where there’s smoke, there’s fire.”  In this instance, the smoke was concrete dust that damaged a warehouse full of aircraft parts.  No fire was necessary.

An Owner of an aircraft parts distribution facility hired a Contractor to install an elevator at Owner’s warehouse in Fredericksburg, Virginia.  The installation required an elevator pit to be cut through several inches of existing concrete.  The Contractor used jack hammers and concrete saws without water, which created a significant cloud of dust and particles.  The dust cloud settled on and damaged the aircraft parts inventory stored nearby.

Owner’s Insurer argued dust and particulates were excluded from coverage under the Pollution Exclusion pertaining to “any solid . . . irritant or contaminant.”  Owner argued that dust and particulates were “smoke,” which was covered under the policy regardless of the Pollution Exclusion.

The Court agreed with the Owner that the dust cloud was “smoke” and was covered.  The insurance policy did not separately define “smoke.”  But, the term was used in more than one instance in the same policy, from which the Owner successfully argued an ambiguity.  The ambiguity allowed the Owner to successfully argue that “smoke” included “any visible suspension of particles in a gas, including the concrete [saw]dust.”

When signing your next contract, consider how a third-party may interpret it months or years later.

Allied Property and Casualty Insurance Co. v. Zenith Aviation, Inc., Case No. 1:18-cv-264 (U.S. District Court, Eastern District of Virginia, Aug. 29, 2018)

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