Great American had previously asked a federal court in Houston to determine whether the total pollution exclusion of its excess policy applies to the claims asserted in the underlying lawsuits. This exclusion, like a similar exclusion in the policyholder's primary liability policy, excluded coverage for certain injuries arising out of "pollutants." Both policies defined "pollutant" to include "smoke," "soot" and "fumes."
The policyholder's primary policy, however, also contained what is commonly known as a "hostile fire" exception, which stated that its pollution exclusion does not apply to injuries arising out of "smoke" or "fumes" from a "hostile fire." The Great American policy did not contain this exception.
The agreement between Great American and its policyholder will result in the dismissal of Great American's federal court action.
Whether Great American's policyholder is liable to the plaintiffs will be determined in future proceedings in the lawsuits filed by the families of the individuals who died in the fire.
Great American's policyholder has consistently maintained that its conduct did not cause or contribute to the fire or its tragic consequences.