$70 billion spread across eight states. More
recently, a severe storm in Portland, Ore.,
caused heavy rain and flooding that filled
the city, and even entered buildings. In
one case, flood waters entered an elevator
shaft and the oil normally in the elevator
shaft mixed with the water, making a bad
situation worse. Usually, flood water can
be pumped back into the drain system,
but water contaminated with oil requires
special disposal, which increases the cost
and activates an environmental policy.
Contractors face these types of risks
when they assume the costs of oil cleanup
from day tanks. They are also at risk when
construction efforts contaminate the site.
Pollution caused by an adjoining property is a less common risk, but has similar
effects. In these cases, pollutants migrate
and contaminate surrounding areas, and
whoever is responsible for the source of
the pollution is liable. Causes may include sewage, oil, underground storage
tanks, even dry cleaning fluids.
However, natural resource damages
pose a much greater threat to contractors.
When a person’s or a business’s actions hurt
the environment, the government quanti-fies what the value of that damage is worth.
The government agency then issues a fine,
which can total six to seven figures. In New
Jersey, a judge approved a $225 million
judgement against ExxonMobil Corp. to
resolve natural damage claims. The ruling
caused public outcry and disappointment
because the state’s original analysis of the
damage quantified it at $8.9 billion.
Unlike natural resource damage assessments (NRDs), which can be caused by
one’s own negligence, in non-owned disposal sites (NODS), the originator of waste
is financially responsible for the cleanup
even if the waste was disposed of properly at an approved facility. Essentially, the
producer of waste is responsible for the
waste forever, long after it has been sent to
a landfill. If a disposal site has an environmental issue, the Environmental Protection Agency will require the original owners of the waste to bear the cleanup cost.
There are a number of emerging environmental risks today. Some are easy to
see and others may appear invisible. Individuals with a vested interest in real estate
holdings should be aware of and address
these threats. Traditional environmental
hazards like fires, explosions, tank leakage, and other perils still contribute to the
top severity claims, but as environmental
risks evolve and new kinds emerge, it is
important to evaluate how liability insurance can help manage them.
Marcel Ricciardelli is senior vice president,
of the Environmental & Engineering
Division, Allied World.
preparing for these risks, they can protect
the value of their assets, namely their real
estate. Understanding the risks inherent
with extreme weather also enables commercial real estate owners to protect their
investments and minimize risk.
These parties must also manage another
aspect of extreme weather — the cost of
cleaning up the aftermath. The damage
from Hurricane Sandy was estimated to be
28 FEBRUARY 2016 Claims Magazine PropertyCasualty360.com
IN COMMERCIAL TRANSPORTATION CLAIMS SINCE 1962
CARGO HEAVY EQUIPMENT ENVIRONMENTAL