Environmental liabilities affect businesses from a broad spectrum of industries. These claims come in all sizes, ranging from massive oil spills to small-scale hazardous waste left at a construction site. Environmental liability claims, whether brought by government entities or third parties, routinely involve multi-million-dollar exposures. Just one of these claims is large enough to threaten the financial health of companies, many of which still rely on coverage from commercial general liability (CGL) policies to manage this exposure. However, standard CGL policies generally exclude coverage for damage from pollutants, chemicals, or other environmental hazards.
Examples of Environmental Liability Risks
Prevention goes a long way toward managing environmental risks. However, even with the best preparation and the strictest safety measures, business practices inevitably can cause environmental harm. An effective environmental risk management approach anticipates both the probability of unintentional accidents and the likelihood that normal operations will inevitably lead to contamination. Even in cases where there are no known present sources of environmental harm, changes to regulations and remediation strategies mean environmental risks can happen at any time and for any unforeseen reason.
Environmental risks impact every aspect of how a business operates. The safety of employees, possible damages to property, and the costs of remediation in the event of contamination are all key factors in environmental risk management. The specifics of these risks differ from industry to industry, but some common business environmental exposures include:
- Pollution risks caused by product or employee failure
- Environmental health hazards and risks to employee safety
- The cost of changing business practices or operations in response to shifting regulatory requirements
- Remediation of damage in the aftermath of a contamination or when remediation standards change, and an old case is reopened
- Costs for defense of toxic tort claims brought after a contamination, or in response to the proliferation of goods previously not known to be toxic (e.g., chemicals found in firefighting foams, non-stick cookware, mattresses, and other furniture)
- Environmental claims stemming from operational risks
Environmental Liability Claims: How We Can Help
Payne & Fears advises companies facing environmental liability claims and provides counsel on building adequate risk-transfer strategies. One major concern is that many policyholders believe they already are covered for pollution under their general liability policies. However, these policies usually restrict or exclude this coverage. Procuring risk-specific environmental insurance (sometimes referred to as pollution insurance) generally covers this gap in general liability policies and is designed to cover claims against policyholders for bodily injury, property damage, remediation, and business interruption.
Disputes between policyholders and their insurers regarding coverage for environmental liability claims often are grounded in policy language that is vague or ambiguous or in factual nuances regarding the cause and nature of the damage. Payne & Fears attorneys are familiar with the tactics often used to deny environmental liability claims and believe the best approach to resolving these disputes is an incremental one. We work to resolve disputes quickly and efficiently through negotiation with insurers. However, when this does not work, we are professional litigators and can leverage decades of experience fighting for policyholders in many jurisdictions and venues, including state and federal courts and private arbitration.