## Facts

- Nav-Its, Inc., a tenant fit-out contractor, purchased a commercial general liability (CGL) policy from Selective Insurance Company of America for work at a Pennsylvania shopping center.
- Nav-Its hired a painting/coating subcontractor to apply paint, coatings, and floor sealants over multiple days in 1998.
- A physician-tenant in the shopping center alleged he was exposed to fumes from the floor coating/sealant operations, suffered acute physical symptoms, and sought medical treatment.
- The physician sued Nav-Its for bodily injury allegedly caused by exposure to those fumes.
- The Selective CGL policy promised to pay damages because of “bodily injury” or “property damage,” but included a pollution exclusion endorsement barring coverage for injury “arising out of a ‘pollution hazard,’” defined broadly to include harmful effects from the “discharge, dispersal, seepage, migration, release, or escape” of pollutants.
- The endorsement also excluded certain costs tied to obligations or orders to test for, monitor, or clean up pollutants, and contained a limited 48-hour indoor exposure exception.
- Nav-Its tendered the defense and indemnity to Selective; Selective denied coverage based on the pollution exclusion.
- After the underlying tort matter was resolved in arbitration, Nav-Its pursued declaratory relief seeking coverage.

## Issues

1. Whether the CGL pollution exclusion for injury arising from the “discharge, dispersal, release or escape of pollutants” applies to indoor bodily injury allegedly caused by fumes from routine floor coating/sealant work.
2. Whether, under New Jersey insurance-interpretation doctrines, the exclusion should be limited to “traditional environmental pollution” rather than ordinary indoor business risks.

## Decision

- The Supreme Court of New Jersey unanimously held the pollution exclusion applies only to traditional environmental pollution claims and did not bar coverage for the indoor fume-exposure bodily injury claim.
- The Court reversed the Appellate Division and reinstated the trial court’s ruling requiring Selective to provide coverage to Nav-Its under the CGL policy.
- The Court treated the 48-hour indoor exposure exception as not controlling because the threshold question was whether the exclusion applied to this type of event at all.

## Legal Principles

- Insurance policies are interpreted in accordance with the insured’s reasonable expectations; exclusions are construed narrowly against the insurer.
- When exclusionary language is reasonably susceptible to more than one meaning, New Jersey courts construe it in favor of coverage.
- CGL pollution exclusions, despite broad wording, are read in context and are directed at traditional environmental pollution (e.g., contamination events and regulatory cleanup scenarios), not ordinary indoor injuries arising from routine business or construction activities.
- Policy context matters: references to cleanup, monitoring, and governmental orders support an environmental-regulatory meaning rather than a reading that would eliminate coverage for commonplace operational risks.

## Conclusion

The court held that a CGL pollution exclusion does not bar coverage for bodily injury from indoor fumes produced during routine floor coating/sealant work, limiting the exclusion to traditional environmental pollution and requiring the insurer to provide coverage.


Nav-Its, Inc. v. Selective Ins. Co. of Am., 183 N.J. 110, 869 A.2d 929 (N.J. 2005)