A recent decision from the United States Court of Appeals for the Seventh Circuit, in the matter between Hammond Power Solutions Inc. v. National Union Fire Insurance Co. (2025), provides important guidance on the interpretation of exclusions in commercial general liability (CGL) policies—particularly those relating to radiation. The ruling confirms that a broadly worded exclusion for "any form of radiation" will be enforced as written, even where the claim involves electromagnetic field (EMF) radiation rather than traditional radioactive sources.
Background
Hammond Power Solutions Inc., a manufacturer of electric transformers, was sued in New York State Court by individuals alleging that transformers installed near their residence emitted hazardous levels of EMF radiation, resulting in cancer. Hammond sought defence and indemnity from its CGL insurer, National Union Fire Insurance Co., under a policy that included a "radioactive matter exclusion" endorsement. This endorsement excluded coverage for claims arising from exposure to "any radioactive matter or any form of radiation."
The insurer denied coverage, relying on the exclusion. Hammond then initiated a coverage action, arguing that the exclusion should not apply to EMF radiation, or at least should be interpreted narrowly. The district court sided with the insurer, and Hammond appealed to the Seventh Circuit.
Key Policy Language and Arguments
The policy barred coverage for "bodily injury or property damage arising out of the actual, alleged or threatened exposure of person(s) or property to any radioactive matter or any form of radiation". Hammond contended that the exclusion should be read narrowly, arguing that "any form of radiation" should be limited by the preceding reference to "radioactive matter," and that EMF radiation was not the type of hazard the exclusion was intended to address. The insurer maintained that the exclusion was unambiguous and applied to all forms of radiation, including EMF, regardless of the source.
The Seventh Circuit's Decision
The Seventh Circuit affirmed the district court's decision, holding that the exclusion was clear and unambiguous. The court's analysis focused on several key points:
- The court emphasised that the phrase "any form of radiation" is broad and contains no limiting language. The use of "any" was interpreted in its ordinary sense, encompassing all types of radiation, including EMF.
- The court rejected the argument that the exclusion should be read in light of the preceding reference to "radioactive matter." The disjunctive "or" in the exclusion made clear that "any form of radiation" was a separate and independent ground for exclusion.
- The court found no ambiguity in the exclusion's wording. There were no inconsistencies or alternative reasonable interpretations that would justify a narrower reading.
- The court dismissed arguments that the title of the endorsement ("radioactive matter exclusion") or its placement within the policy should limit its scope. The operative language, not the heading or location, was determinative.
- The court refused to consider Hammond's business model or expectations as a basis for narrowing the exclusion, noting that the parties' intent must be derived from the policy's clear language.
The court also addressed Hammond's suggestion that applying the exclusion to bar coverage for injuries such as sunburn or microwave burns would be absurd. The court found that, given the breadth of the exclusion, such results were not absurd but rather a consequence of the policy's plain terms.
Why EMF Matters
Electromagnetic fields are generated by numerous every day and industrial sources, including power lines, transformers, mobile phone towers, and wireless networks. Although EMF exposure is a normal feature of modern life, litigation alleging adverse health effects — such as cancer — has emerged in various jurisdictions. In South Africa, where residential and commercial properties are often situated close to electrical infrastructure, similar claims could surface. The Hammond Power Solutions ruling illustrates that where a policy exclusion is broadly drafted — such as for "any form of radiation" — courts may apply it to EMF without limitation, leaving policyholders without cover for such claims.
Conclusion
The Hammond Power Solutions decision is a clear affirmation of the principle that insurance contracts will be interpreted according to their plain language, particularly when it comes to exclusions. For policyholders, the case is a cautionary tale: broad exclusionary language can and will be enforced, even in circumstances that may not have been contemplated at the time of contracting. Insurers, for their part, are reminded of the importance of drafting exclusions with precision and clarity. As claims involving EMF and other emerging risks become more common, both sides must pay close attention to the wording of their insurance contracts to ensure that coverage aligns with their expectations and needs.
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