key issues on environmental insurance - rims handouts/rims 15/icm005/final speak… · key issues...
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KEY ISSUES ON ENVIRONMENTAL INSURANCE (ICM005)
Speakers: Ken Burrell, Managing Partner, Synapse Services
Steve Lawrence, Partner & Vice President, Insurance Office of America
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Learning Objectives
At the end of this session, you will learn : • The importance of environmental insurance
– Source of Claims
• Dissect different environmental coverages to determine what they include
– Site Pollution, Contractors Pollution, Transportation Pollution
• Prepare for issues such as legionella, mold, contaminated properties, natural resource damages and waste
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Potential Source of Claims
• Substance Specific – Regulated, Hazardous, Non-Listed
• Operational – Site Conditions – Remedial & Abatement Activities – Waste Management & Disposal – Transportation
• Regulatory – Torts, Contractual Liability & Environmental Statutes
• CERCLA “Superfund” • RCRA “Cradle to Grave”
Evaluate Exposure based on the: • Past • Present • Future
Source: International Institute Environmental Risk Management and EPA.GOV
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Why Environmental Insurance? • Products Liability Claims
– Bodily Injury, property damage, and environmental damages • Transportation Claims
– Claims involving spills at ports, railcars, pipelines, aircraft, watercraft, and vehicles
• Site Contamination & Remediation Claims – Known contamination, ponds, lagoons
• Non-Owned Location Claims – Drum recycling service involving abandonment – Tank wash facilities – Waste disposal sites – Third party warehouses
• Contractor Pollution Claims – Completed operations – Job site
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Managing Environmental Risk • Contractual Liability
– Reviewing agreements with environmental indemnities – Use of contractual agreement with 3rd party vendors
• Post Claim Resources – Using the insurance company relationships with spill response and public
relations vendors
• Site Contamination & Remediation Issues – Scheduling sites on the policy with as much retroactive coverage as possible – Negotiating manuscript policy language
• Non-Owned Location Due Diligence – Obtain pre-approval from insurance company on any third party site – Schedule the site onto the insurance policy – Use contractual agreements to manage this risk
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Environmental Insurance Markets
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Insurance Program Structure
General Liability
(GL) - Products
Pollution Transported
Cargo
Excess Liability
Pollution Legal
Liability (PLL)
Contractors Pollution Liability
(CPL)
Pros • Same insurance
company • Financial savings • Seamless coverage • Higher limits • Tailored program Cons • Shared limit • No multi-year policies
Why combining environmental coverage may make sense?
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Types of Pollution Coverage
SITE
What you need to cover third party
bodily injury, property damage or cleanup cost arising from a
pollution condition at an owned, operated
or non-owned location.
CONTRACTORS
What you need to cover a pollution
condition from your operations at a job
site.
TRANSIT
This provides coverage arising from a pollution condition involving your cargo
on a watercraft, vehicle, railcar or
aircraft.
PRODUCTS
This provides coverage for third party bodily injury,
property damage and possibly clean up
costs arising from a product that is defined as a “pollutant”.
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Site Exposure Pathways
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Site Pollution Coverage
Acronyms: PLL, EIL, PPL, SPILLS, PEL, SP, ELL, PARLL
• Coverage for fixed facilities providing protection related to: – Escape or release of new pollutants at a facility – Unknown or pre-existing contamination at a facility – Waste disposal (historic and operational) – Legal defense – Illegal dumping – Business interruption – On and off-site cleanup – Third party bodily injury and/or property damage – Natural resource damages
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Key Issues Site Pollution
• Dealing with known conditions • Disclosed documents • Sudden or gradual releases of pollutants • On-site cleanup coverage triggers
– Discovery – Third party – Government mandated trigger
• Mold & Legionella – Definition of a pollution incident – Restoration costs – Definition of cleanup costs
• Natural resource damages • Non-owned locations
– Blanket versus scheduled
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Contractors Pollution Coverage
• Coverage for protection related to: – Disturbance and release of unknown hazardous building materials (lead based paint,
asbestos) – Silt and sedimentation – Severing unmarked or mismarked utility lines and causing a release – Indoor air quality issues (vapor intrusion, mold, carbon monoxide, legionnaire’s
disease) – Leaks/releases of hazardous materials caused by construction defects or improper
installation – Spills from transporting construction materials or hazardous materials used in
contracting equipment – Disposal of construction materials
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Key Issues Contractor Pollution • Definition of “Covered Operations”
– Broad or specific operations
• Sudden or gradual releases of pollutants • Completed operations versus operations
– General Liability has a total pollution exclusion
• Subcontractor performing work on your behalf • Contractual liability • Diminution in property value • Pollutants definition
– Lead, Asbestos, Microbial Matter, Legionella, Silt & Sediment – Natural Resource Damages
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Transit Pollution Coverage • Coverage for protection related to:
– Release or spills of substance specific material while in transit via a conveyance (railcar, barge, vehicle, aircraft)
– Third party bodily injury and/or property damage including cleanup/remediation costs – Defense costs
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Key Issues Transit Pollution • Definition of transportation
– Broad or narrow
• Contractual Liability • Definition of conveyance
– Railcar – Vehicles – Aircraft – Watercraft
• Commercial Auto CA 9948 Broadened Pollution versus Transported Cargo Pollution
– Occurrence versus Aggregate – MCS-90 and Broadened Pollution Coverage
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Key Issues Products Pollution • Most General Liability policies have a total pollution exclusion
– Definition of “pollution” is extremely broad – Most pollution exclusion endorsements eliminate the products pollution coverage
• Absent a total pollution exclusion, cleanup costs are ly ocovered as property damage provided the obligation to remediate the property exists outside of any statute, regulation or government order.
– Majority of liability payments are from those statutes, regulations or government orders
• Coverage for third party bodily injury/property damage and environmental damages
– Natural Resource Damages – Medical Monitoring
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Questions & Answers