Texas Appellate Court Applies Pollution and Contamination Exclusion to Bar COVID-19 Business Interruption Coverage Under Property Policy

The Texas Court of Appeals for the Fourteenth District affirmed summary judgment under Texas law holding that a commercial property policy’s “pollution and contamination exclusion” barred coverage for COVID 19 business interruption losses. Houston Livestock Show & Rodeo, Inc. v. Nat’l Fire & Marine Ins. Co., 2026 WL 873050 (Tex. App. Mar. 31, 2026).

The insured nonprofit entity annually operates a major livestock show and rodeo at a county‑owned sports complex. After a patron tested positive for COVID‑19 in March 2020, local public health authorities issued a property‑specific quarantine order that prohibited access to the complex, forcing the event’s early closure. The nonprofit sought business interruption coverage as an additional insured under a commercial property policy issued to the property owner. In the coverage action, the insured pursued coverage only under the policy’s civil authority and impaired ingress/egress coverage extensions, arguing that the policy’s exclusions did not apply to these coverage extensions.

The policy contained a “Pollution, Contamination, and Debris Removal Exclusion Endorsement” that included a “Pollution and Contamination Exclusion” stating that the policy “does not cover loss or damage caused by, resulting from, contributed to or made worse by” the release or dispersal of “CONTAMINANTS or POLLUTANTS.” The endorsement defined “CONTAMINANTS or POLLUTANTS” to include “any solid, liquid, gaseous or thermal irritant or contaminant . . . which after its release can cause or threaten human health . . . including but not limited to, bacteria, fungi, [and] virus.”

The court rejected that the insured’s interpretation that the Pollution and Contamination Exclusion did not apply to the coverage extensions. Reading the policy as a whole, the court held that nothing in the coverage extensions displaced the Pollution and Contamination Exclusion’s express statement that it applied to all coverage provided under the policy. The court ultimately concluded that, under the Policy’s unambiguous language, the Pollution and Contamination Exclusion barred coverage for the insured’s claims and granted summary judgment in favor of the insurer.