Third Circuit Says No Coverage for Damage Caused By Decomposed Body

In Certain Underwriters at Lloyd’s, London Subscribing to Policy No. SMP3791 v. Creagh, 563 Fed. Appx. 2009 (3d Cir. 2014), a case of first impression, John M. Clark and Georgia S. Foerstner, convinced the United States Court of Appeals for the Third Circuit that coverage for property damage caused by a decomposed body was excluded per the policy’s Microorganism and “Seepage” exclusions. In August 2011, Underwriters’ insured, Williams Creagh, made a claim for property damage in the amount of $180,000 for damage caused by the decomposed body of a tenant. Fluids seeped from the body causing damage to several rooms and a noxious odor permeated the entire apartment building requiring mediation. The building was insured by Underwriters per an all-risk commercial property policy. The policy contained a microorganism exclusion that excluded coverage for loss caused directly or indirectly arising out of or relating to microorganism of any type nature or description. . .” The policy also contained a “Seepage, Pollution and Contamination” exclusion that excluded coverage for loss “aris[ing] from any kind of seepage or any kind of pollution and/or contamination.”

John and Georgia filed a declaratory judgment action on behalf of Underwriters in the United States District Court for the Eastern District of Pennsylvania and argued that the damages sought by Creagh were excluded per the foregoing exclusions. They retained the coroner of Montgomery County, PA, a board certified forensic pathologist, who testified that the fluids that seeped from the decomposed body contained bacteria, a microorganism. Therefore, they argued that because the damage to the building was caused by microorganisms, coverage for the damages sought by Creagh was excluded. They also argued that because the bodily fluids and other biological matter that damaged the apartment constituted bio-hazardous medical waste whose removal and remediation was regulated by several local, state and federal statutes including the Occupational Safety and Health Administration and Department of Transportation, coverage for the cost to remediate the bodily fluid and noxious odor resulting from same was excluded per the Seepage exclusion.

The district court agreed and entered summary judgment in Underwriters’ favor. The court also dismissed Creagh’s counterclaim for breach of contract and bad faith finding Underwriters had a reasonable basis to deny coverage. Creagh appealed and the United States Court of Appeals for the Third Circuit upheld the district court’s ruling. This case is of particular significance as it is the only case in the United States interpreting the subject exclusions within the context of damage caused by a decomposed body.

For full discussion of underlying case see district court opinion at Certain Underwriters at Lloyd’s, London v. Creagh, 2013 WL 3213345 (June 26, 2013). If you wish to consult with one of your attorneys regarding any of your insurance needs, please feel free to contact us at 856-347-4293. You can also email our firm’s President/CEO and Group Leader of our Insurance/Litigation Group at or you can visit our website at