including the site owners, waste depositors
and other potentially responsible entities.
Lastly, insurance coverage issues in environmental claims are common and hotly contested. Pollution claims involving
activities that occurred over decades have
the potential to trigger many insurance
policies, both at primary and excess levels, and generate complex risk allocation
issues. Questions may also arise about
whether the policyholder must contribute to the cost of cleanup for periods of
time when insurance either was not purchased or is otherwise unavailable.
Apart from allocation, there are numerous exclusions — such as those related to
pollution or owned property — that may
apply to limit or eliminate coverage. Even
the term “pollutant” has been hotly contested. Beware of this minefield and avoid
trouble by knowing the policy and the governing law, and carefully crafting coverage
positions and reservation of rights letters.
Five tips for environmental
With this background, it is recommended
that claims professionals follow these five
tips to bring environmental claims to successful resolution:
1. Investigate and move
the claim forward promptly
A basic tenet of all claims handling is
prompt investigation; this is especially true
with environmental claims. First, a pollu-
tion event will likely trigger a formal re-
sponse process under federal and state law,
which requires that specific steps be taken
on a set schedule. Second, prompt han-
dling may assist in mitigating damages by
quickly limiting the scope to the contami-
nation. Third, prompt responsive action
helps to avoid bad faith claims by eliminat-
ing a common bad faith argument — un-
necessary delay — and by maintaining a
positive relationship with the claimant.
2. Utilize professional expertise
With a pollution incident such as an oil
spill, it is important to get an environmental professional to the site as quickly as
possible. Your consultant may determine
the cause of the claim at the outset, assess
whether anything can be done to limit the
scope of the problem, and help meet the
regulatory compliance requirements. The
professional can document important information through photographs, identify
key witnesses, and preserve evidence to
reduce the risk of a spoliation claim.
Most importantly, a trusted environmental professional can provide assistance throughout the claim with advice on
alternative causes and remediation techniques. This individual also has the ability to monitor costs to ensure that other
professionals and contractors’ approaches
and charges are reasonable. Beware of
how communication with a consultant is
handled. Texting may be easy, but informal messages are easily misinterpreted.
Assume everything sent to an expert will
be available to the policyholder’s attorney
and carefully craft any communications.
3. Communicate effectively with
Prompt, professional and responsive
communication throughout the claim is
key to effective claims handling. Cover-
age letters should be sent as soon as pos-
sible. Reservation of rights letters should
specify all the potential bases on which
coverage might reasonably be denied. The
determination of whether there is cover-
age for an environmental claim under a
specific state’s law may be complicated. In
instances where there is uncertainty, uti-
lization of resources in-house or through
coverage counsel is essential.
Be sure to communicate the scope of
the insurer’s duty to the policyholder.
Particularly when many consultants are
involved and the damages have the potential to extend beyond coverage limits,
the failure to communicate and document
who is responsible for what often leads to
problems that could have been avoided.
4. Carefully document the file
Successfully documenting the file with
important information is more difficult
as claims get larger and involve more
parties, consultants and money. Be sure
to stick to the facts and avoid comments
that could be misinterpreted to support a
bad faith claim. For example, if there is a
note in the file to investigate something,
do it or state why it became unnecessary.
The entire claim file has the potential to
be read by attorneys seeking to second-guess an adjuster’s actions.
Sometimes frustrations and emotions
show through. Consider the tone and
content of any communications. Even
voicemail messages, commonly saved as
data files, have the potential to be played