In January 2026 the Illinois Supreme Court ruled that the fact that the insured had emitted ethylene oxide from their medical-equipment sterilisation facility pursuant to a permit issued by the Illinois environmental authority was irrelevant to the application of the standard pollution exclusion covering what the court called “traditional environmental pollution”. Cover was excluded.
The policyholder sought an order compelling the insurer to defend them against a class action by residents who claimed that the emission of ethylene oxide for more than 35 years had caused nearby residents to experience a range of illnesses. The lower court had ordered the insurer to cover $150 million in defence costs.
The plain language of the pollution exclusion barred litigation involving “the discharge, dispersal, release or escape of smoke, vapours, soot, fumes, acids, alkalines, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water”. The pollution exclusion said nothing about permitted or authorised pollution. The discharge of the emissions fitted squarely within the plain language of the exclusion according to the appeal court. Previous decisions had applied the exclusions to “traditional environmental pollution” or “pollution harms as ordinarily understood”. It was irrelevant whether the underlying pollution was permitted or not. All that counts is that the underlying lawsuits were premised on a claim that the emissions caused injury for which the plaintiffs were seeking damages, and that claim triggered the pollution exclusion.
The court observed that it must not inject terms and conditions different from those agreed upon by the parties. The permit did not change the character or substance of the emissions as pollution. If the emissions were not pollution there would have been no need for the policyholders to obtain a permit in the first place. The permit allowing the emissions did not, in some manner, render the emissions no longer pollution in the plain and ordinarily understood meaning of the word.
The same principles ought to be applied in South Africa on the same wording which is similar to locally imposed pollution exclusions.