Can a Foul Odor be Considered ‘Property Damage’ under your Insurance Policy?
On the other hand, courts have ruled that odor alone is not direct physical loss. In Universal Image Prods. v. Fed. Ins. Co., the Sixth Circuit found no direct physical loss, stating that although there may have been an odor, the odor did not make the building unsafe. Does this mean there is only direct physical loss if the building is unsafe? What if the smell is highly unpleasant, but not dangerous? For example, imagine that your neighbor deals heavily in raw fish, every day. Could a court find that such a constant, overwhelming odor qualifies as direct physical loss?
Even assuming an odor qualifies as direct physical loss, the next step would be to determine whether a coverage exclusion applies. There is a common “pollution” exclusion in insurance policies, but courts have been reluctant to apply this exclusion to odors. For example, the court in Mellin ruled that the pollution exclusion was not applicable because the relevant policy did not define “pollutant” to specifically include cat urine. However, it is easy to envision a scenario where the pollution exclusion would apply. Imagine that toxic waste was released into a stream, causing an odor to persist in a nearby home. Would the pollution exclusion apply?
No one likes an unpleasant odor, especially homeowners. The issue is relatively novel, but the Insurance Industry Group here at Timoney Knox is keeping an eye on it!