Environmental claims
present complex issues
There are countless types of claims that
fall under the large umbrella of the term
“environmental claims” and insurers’ own
interpretations of what constitutes such a
claim vary. Environmental claims can be
broadly categorized as contamination/
pollution, property damage, or bodily
injury claims, but even the definition of
these simple-sounding terms can become
a contentious dispute.
A few examples of classic environmental claims include oil spills, storage tank
leaks, dry cleaning chemical releases,
landfill contamination and odor, laboratory waste, contaminated water, and water
loss/mold claims. Sometimes toxic tort
claims, based on bodily injury or wrongful
death allegedly caused by industry-made
chemicals (e.g., benzene, Bisphenol-A,
and diacetyl) or even natural substances (e.g., asbestos, mold, and lead), are
thought of as environmental claims. All
of these classic and non-traditional “
environmental” claims present similar types of
challenges for the claims professional.
A variety of factors make environmental claims challenging. By definition, they
typically involve complicated scientific,
medical and legal/regulatory issues.
For example, to assess the source, extent
and remediation options for a pollution
claim at an industrial site, environmental
professionals, geologists, chemists, struc-
tural or mechanical engineers, as well as
other consultants or contractors may need
to be retained. Some of the remediation
work should be handled by a licensed pro-
fessional to be in compliance with appli-
cable state and federal laws, which likely
require specific steps including notifica-
tion, assessment and disposal to be taken
before a site can be “closed,” with or with-
out conditions for future handling.
In many claims, decades can elapse
between the action that caused the con-
tamination, and the alleged harm. Sorting
out the facts to determine who did what
to cause the claim now being made can
require a virtual archeological dig, the
interpretation of decades-old laws and
standards, as well as the impact of poten-
tially crucial intervening events. Assess-
ing the precise triggering event and its
consequences, in bodily injury claims for
example, frequently requires the retention
of a team of experts such as industrial hy-
gienists, epidemiologists, and occupation-
al health physicians. The claims handling
process can look like an episode of CSI.
Environmental claims present a multidimensional challenge in that they typically involve many parties, all of whom look
to shift the responsibility for the cost of
cleanup to someone else. Even the simplest
of oil spills may involve the homeowner,
the fuel delivery company, the heating service company, valve and boiler manufacturers, and others. Larger contamination
claims, such as landfill sites, typically involve many parties, sometimes hundreds,
The incredible complexity and variety of environ- mental claims challenge the most seasoned claims professionals. Simply interpreting the policy and
determining the actual facts are tasks fraught with obstacles that can lead to a bad faith claim. How can you
turn the chaos of multiple antagonistic experts and insurers into a symphony of steady movement toward a
favorable resolution? This article examines what makes
environmental claims more challenging (and intellectually
rewarding), and offers five tips that claims professionals
can use to navigate these claims to successful resolution.
