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A recent decision by the Supreme Court of Wisconsin showcases the draconian application of the pollution exclusion and the need for policyholder understanding.  In Wilson Mutual Insurance Co. v. Falk, 857 N.W.2d 156 (2014) the facts were simple:  Falk, a farmer in rural Wisconsin, spread liquid cow manure on his fields for fertilization.  Despite obtaining a nutrient management plan prepared by a certified crop agronomist and approved by the county’s Land and Water Conservation Department, the manure leeched into several neighbors’ wells, rendering the water undrinkable.

Falk’s insurer, Wilson Mutual Insurance, brought a declaratory judgment action asserting the claims are barred by the pollution exclusion.  The trial court agreed, denying coverage.  The Wisconsin Court of Appeals reversed the decision – noting that liquid cow manures on fields is not a pollutant, instead classifying it as “liquid gold” when applied to a farm field.  The Supreme Court reversed, reinstating the trial court’s holding.  The Court noted that “while an insured may not consider manure safely applied on a field to be a pollutant; however a reasonable insured would consider manure in a well to be a pollutant.  Just because manure may be beneficial when spread on a field, does not mean it is not a pollutant.  Manure is a contaminant as it makes water impure or unclean when it comes into contact with or mixes with water.”

This case illustrates the incredible effect of the pollution exclusion has on a variety of claims where the insured likely never considers the substance it uses in its everyday business as a pollutant – as commonly understood.  Instead of analyzing the expectations of the insured as to whether a completely natural substance such as manure is what a reasonable person would deem a “pollutant,” the Court looked at the effects and seemed to reverse-engineer its rationale based on its final ruling.  Ultimately, policyholders need to be aware of the extreme potency of this exclusion and the Court’s willingness to deem a substance a “pollutant” even when it is completely natural and deemed by other jurists analyzing the same facts to be “liquid gold.”

Frank Cragle is a trial lawyer and a member of Hirschler Fleischer’s Insurance Recovery Team. He handles a variety of commercial business disputes, including insurance recovery and policyholder claims.  Frank also devotes a substantial portion of his time to business tort litigation and employment law. For more information, contact Frank at 804.771.9515 or

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