The 4-year-old son of a Lead Arms tenant, Jason Jones, became ill, was found to high levels of lead in his blood, and was diagnosed with lead poisoning. Testing of the paint in the Jones's apartment revealed high levels of lead.

Mr. Lord purchased the insurance policy prior to the Joneses moving into the apartment, and it was in effect at the time of Jason's diagnosis. While the policy has a general pollution exclusion, it does not specifically list lead paint as "pollution." The language of the exclusion discusses injuries caused by "discharge, dispersal, release, or escape of pollutants.''

The Joneses filed suit against S. Lord, who then notified the insurance company of the lawsuit, anticipating that Innovative would defend him and indemnify the Jones if he was found liable.

`1- Wich issues regarding this case, as they are worried about similar claims arising in the future and want to plan their reserves.

2- Does the insurer have a duty to defend, and if so, on what grounds? If the insurer must defend, will the insurer need to indemnify? Why, or why not? 3- How does the duty to defend serve the larger purpose of insurance? 4- Are there any ethical issues associated with an insurer denying a claim when there is overwhelming evidence to support it?

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