AN OVERVIEW OF THE INSURANCE ARCHEOLOGY PROCESS AND THE NUANCES THAT ENVIRONMENTAL ATTORNEYS CONSIDER WHEN DETERMINING WHAT YOUR HISTORICAL INSURANCE SHOULD PAY FOR 

BY: DRU SHIELDS, ANDREW SKWIERAWSKI, TED WARPANSKI 

Unearthing old insurance coverage during an insurance archeology search can trigger a feeling of immense relief for a drycleaner or small business owner looking for financial assistance to cover their environmental services. It is, however, the first step in a series of steps towards getting those critical funds. Grappling with the language of the policy and the state-by-state caselaw which dictates what the insurance carriers are obligated to pay out will help set reasonable expectations and help you chart out your larger environmental cleanup plans. 

With the inherent complexities of insurance archeology and claims tendering activities, it is always recommended that you have experts by your side through this undertaking. This article will give you a basic understanding of how an experienced insurance archeologist combined with a skilled attorney with experience in insurance law, can find your old coverage and use it to pay for defense against environmental claims. 

Watch the webinar “How much environmental cleanup will your insurance actually pay for?” 

HOW TO FIND OLD INSURANCE COVERAGE
The sole purpose of understanding how much environmental cleanup your insurance carrier will cover depends on finding those old policies first. When we are approached by drycleaners who are facing environmental contamination issues, we prioritize looking into insurance as a means of funding environmental investigation and remediation. This is the case, no matter what part of the process a drycleaner is in. It is possible that they just found out that they have an issue, or they are getting their ducks in a row and are looking to be proactive, or they are in the middle of addressing environmental concerns. Once that can of worms has been opened, it is nearly impossible to close it again. The goal is to minimize out-of-pocket expenses because environmental cleanup is expensive.  

Through historical insurance archeology we reconstruct your historical insurance coverage or your predecessor’s historical insurance coverage. The definition of insurance archeology is tracking down the proof that policies existed. We want to know the terms and conditions, the limits of those policies, and many times we do not find full policies, but we need formal proof of their existence. This could be through canceled checks, declaration pages or cancellation notices. In those instances, when we do not have a full policy, but we have secondary proof like this, we usually partner that proof with specimen policies to back up those existing pieces. We look for Commercial General Liability (CGL) policies, which are your standard slip-and-fall policies that would have protected the policyholder against claims for property or bodily damage.  

When it comes to finding your historical insurance policies, it is a common misconception that there is some sort of database or website where insurance archeologists just type in a person’s information, and it will pull up that person’s historical information. Unfortunately, that is not the case. If it were, insurance archeology services probably would not exist. Many times, the first step to reconstructing your insurance coverage is by reviewing a business owner’s old business files and old personal files. We always recommend that a business owner holds onto everything they have. Information held within old business records—no matter how inconsequential they seem to you—could hold information that an insurance archeologist is going to find valuable in their search from tracking down leads to coverage.  

That said, it is common for a drycleaner to throw out all their old records, and in these cases an insurance archeologist is going to dig deeper. Insurance archeologists look everywhere for proof of insurance, and it usually is a bit more involved than digging through old files. They conduct personal interviews, review public records, and review any available business records to look for leads in addition to proprietary methods. Understanding the full scope of coverage available to a business is really the first key to understanding how much environmental cleanup is going to be covered by insurance.  

RECONSTRUCTING OLD INSURANCE COVERAGE TO TENDER A CLAIM
At the end of the insurance archeology process, we produce a comprehensive coverage chart with the available evidence from the search. In an ideal situation, the coverage chart will look something like this:

In this example chart, the client has provided the insurance archeologist with evidence of 30 years of continuous coverage at both the primary and excess level. It is generally more typical to find evidence of coverage for just a year or two with lower primary limits under $1 million to under $500k level. As these policies aggregate over the coverage period, that is enough to pay for some environmental cleanups. However, even if you can only unearth evidence of coverage for a year and at a lower limit, any dollar that the insurer would fund a cleanup is a dollar saved from the responsible party’s pocket.  

Once we trigger historical Commercial General Liability (CGL) coverage, there is a variety of tasks that insurance can cover. “CGL coverage for cleanup” is probably the phrase that brought you here to this blog post, but cleanup also includes environmental investigation tasks and technical fieldwork to determine the nature and extent of the problem in the soil and/or groundwater.  Cleanup tasks that are part of the regulatory closure process under the umbrella of “environmental cleanup” can be paid for using CGL policies. That list includes: 

Interfacing with the regulator
It’s not a one-and-done meeting or letter. In many cases, this “interfacing” includes reports, negotiations, and agreements with a regulatory body that can last for years.  

Responsible Party Search
If there was a prior owner-operator at the facility or there is an off-site contributor to a larger contaminant plume, they can be compelled to shoulder some of the environmental liability. 

Legal Defense
Legal fees that go into defending a responsible party against a regulatory claim or a third-party claim. 

It takes a trained eye to look at an insurance policy, but more importantly, to resolve the differences in interpretation. Differences in interpretation are where experts on your team come in to discuss the coverage aspect of that actual policy contract. The coverage/interpretation of those contracts varies from state to state. Several defenses can be raised by an insurer, so it takes a trained eye to interpret and to resolve those differences.  

INTERPRETING OLD INSURANCE POLICIES TO DETERMINE COVERAGE
There are the fundamental questions that you must ask on any claim to determine the likelihood of coverage: 

1. What are the risks that you want to litigate coverage on?
2. What do you think you are going to get at the end of the day?  

The starting point on all these projects is the “insuring language” in the policy, which is normally some variation of the following: 

The insurer is obligated to pay on behalf of the insured all sums which the insured will become legally obligated to pay as damages because of property damage to which the insurance applies caused by an occurrence, and the Insurer shall have the right and duty to defend the insured against any suit seeking damages, even if the allegations in the suit are groundless. 

Within that language, we focus on how the following key terms are interpreted: 

WHAT DOES “AS DAMAGES” AND “PROPERTY DAMAGE” MEAN?
Courts differ in jurisdictions as to whether government demands to conduct environmental investigations and cleanups are considered “damages.” There are older cases that have characterized a government demand as a request for injunctive relief against the insured versus a claim for damages. Some courts have found that government demand letters are not “damages.” However, more courts are finding that damages of the environmental cleanup costs themselves are “damages” as an impairment or a liability. They broadly construe that language to cover environmental cleanup costs. That said, the jurisdiction where you are is a particularly important variable in figuring out if you are covered for the claim that is being made against you.   

WHAT IS “AN OCCURRENCE”?
There are two types of General Liability policies: “occurrence-based” policies and “claims-made” policies. The latter of which does not really help you in this instance because “Claims-made” policies require that you make the claim within the policy period. So, that means that if you have a policy from 1980-1981, you need to have made the claim to your insurance carrier between 1980 and 1981. The majority of older CGL policies are “occurrence-based,” which means there must be something that happened during the policy period that gave rise to potential damages and potential liability. The trouble is in an environmental context, we do not often have an acute incident that we can point to and say, “that happened then,” although sometimes we do. Sometimes there are recorded spills like, for example, your perc supply company came to your store in 1981 and did not attach the hose right. It fell off as it was filling, and 15 gallons of perc came onto your driveway. It will raise the question of when the occurrence happened so it can become more central to the litigation.  

Occurrence-based policies under the “Continuous Trigger Doctrine”
If you bought your drycleaner in 1975, but there was a drycleaner there from 1965 to 1975 operated by someone else, and it’s likely that there was some contamination that occurred before you got there, you can still make an argument that your 1975-1977 policy may be on the hook under the “continuous trigger” doctrine. What that doctrine says is instead of defining an occurrence as a limited specific act that occurred at one point in time, the damage the contaminant has done continues through the entire period that it is present in the ground: the soil and the groundwater. That contamination constitutes one trigger that can span multiple policy periods, which is helpful to drycleaners for getting coverage because you do not have to point to one specific occurrence. If we can prove contamination existed prior to a policy period, and nothing was done to clean it up, under the continuous trigger doctrine there is a particularly good argument that there has been an occurrence during the policy period. So, if you start from where you think the first release happened and work back to the point where some sort of cleanup occurs, there is a good argument that there is an occurrence, and the policies throughout that period become triggered.  

Therefore, one of the first things we look for is if there were any first-generation drycleaning machines used on the property. Transfer machines have an inherent opportunity for drips and dribbles and little amounts of drycleaning solution to fall off and hit the concrete floor and move through. It is understood by the insurance carriers that first-generation drycleaning machines operating with perc were likely to have caused contamination. Insurance carriers sort of tacitly acknowledge the fact that these machines were not as tight as they needed to be. When we started to get the third-generation machines with the dry-to-dry functionality and a pan underneath it, that made a significant difference into whether there was a likelihood that contamination occurred. So, if you cannot pinpoint the occurrence, you can often at least point to when there was a first-generation machine in use which will help in making the argument to the insurance carrier that there was an occurrence and property damage during that policy period.  

WHAT IS THE SCOPE OF THE INSURER’S OBLIGATION OR “DUTY TO DEFEND ANY SUIT SEEKING DAMAGES”, WHICH INCLUDES WHAT IS A “SUIT SEEKING DAMAGES”?
Does a responsible party letter constitute a suit? In many of these cases, there is not an actual lawsuit by a neighbor or a third party making a claim against the drycleaner to recover their own costs. It is normally either the drycleaner discovering the contamination themselves or it is discovered some other way, in the “right of way” during municipal work or during a property transaction. When that information is discovered, there is an obligation on behalf of the property owner to report that to their state agency. The state agency, or sometimes the federal government, will issue a “responsible party letter” to that entity saying, “you are obligated to investigate and remediate this site within accordance with your state regulations and statutes.”  

The question that needs to be answered after receiving this letter is whether it is the functional equivalent of a suit in that state, which will determine the scope of coverage. Some states where this meets that standard are Maryland, Arizona, Wisconsin, Alabama, Minnesota, New Jersey*, and Indiana. However, most states have interpretation of the law where a responsible party letter constitutes a suit because it does have real consequences for the insured. So, that may trigger the obligation to defend on behalf of the insured to defend that lawsuit or that claim.  

What is the duty to defend? Think about a car accident where you rear-end someone at the intersection, and you cause damage or personal injury, and that party sues you. You tell your insurance company and give them notice of the suit and they take over. They activate their panel of defense lawyers that they use to defend against the suit because they know that it is covered underneath the policy. You do not have to pay for the attorney’s fees since it is under the policy.  

In the context of a responsible party letter, it is a little more nuanced because the actual defense of the claim is interacting with the regulators on the responsible party’s obligation. You may be looking at what other responsible parties may be out there too. That is why we consider the responsible party letter as the equivalent of a suit and what it provides because there is a duty to indemnify the insured for all sums they are obligated to pay as damages, but there is also a duty to defend them from that claim. The duty to defend itself is broader because you do not actually have to be found liable for anything yet. Your insurance defends you from liability, so it is broader. Even if there is an arguable claim that is made against a party, that duty to defend may kick in, even though ultimately there may be no coverage for a particular component of that claim.  

When we look at Duty to Defend, we look at the “Four Corners Rule.” We look at what the policy says and what claim says, and compare those, and if there is any argument in favor of coverage for that claim, that normally triggers the “Duty to Defend.” Therefore, as soon as we get one of these letters or demands, we put the carriers on notice. Typically, the insurer’s obligations do not kick in until they are put on notice. It is the tender to that claim that triggers the duty to defend and starts that process.  

ARE THERE ANY EXCLUSIONS?
There is a pollution exclusion in all these policies issued after about 1970. Prior to that time, that exclusion did not exist.  

Sudden and Accidental Pollution Exclusion
The insurance carriers decided that they wanted to protect against intentional polluters, so around 1970 they added language in their policies that says, “any release or escape of pollutants isn’t going to be covered, unless that release is ‘sudden and accidental’”.  

What constitutes a sudden and accidental release? This is a hotly debated question. Some courts have found that “sudden” implies that there is some time, some temporal immediacy. For example, someone accidentally knocks over a drum. That is a sudden accident. Or the delivery truck’s hose broke. That is a sudden accident. For those examples, it is easy to say there is a clear sudden, temporal component.  

Over time, there has been litigation that looked at some of the insurers’ own records that found that their own definition of a sudden and accidental release was the equivalent to an occurrence, so some courts have found “sudden and accidental” to be ambiguous and have ruled in favor of the policyholder.  

Absolute Pollution Exclusion
Around 1986, the insurance companies started to notice the pattern that courts were finding the “sudden and accidental” language ambiguous, so they decided to make their language broader and clearer in what is now called the “absolute pollution exclusion.” This means there is no longer an exception for sudden and accidental releases. Any pollutant that is discharged would be excluded. All states, except Indiana, have found this language to be unambiguous, especially as it applies to a situation like a drycleaner. Indiana found it ambiguous in terms of a pollutant, and for good reason. The insurance companies are saying that what happens in respect to one of the most integral parts of your drycleaning business is not covered under your policy. So far, Indiana is the only state that has taken a broad view and said that the absolute pollution exclusion really does not apply to these types of contamination cases.  

Owned Property Exclusion
The “Owned Property Exclusion” says that any damage to a property that you have owned or leased in the past is not going to be covered by insurance. The insurance companies want you to cover your own loss of diminished property value. The scope of this exclusion has been litigated in several courts in several different states. Most have found in favor of the insured in cases where the contamination migrated to groundwater, because the landowner does not own the groundwater. It is owned by the state or held in trust by the state. That is considered damage to other property so that is not going to be excluded.  

Similarly, if contamination that started on your property migrated to a neighboring property, that is also considered damage to third-party property, which will not be excluded for coverage. Some states have found preventative measures where a businessowner cleans up their property to prevent damage to another property to be within the exclusion, while some may allow for that to still be covered as a part of the cleanup costs. If the government is requiring you to clean up your property to restore the environment, some courts have considered “the environment” to be the damage in general, and since states have the right to compel you to undertake that investigation and cleanup, that has been found to not be excluded for coverage.  

We have not seen vapor intrusion directly litigated under the owned property exclusion yet, and we have not had conversations with insurers about that issue and risk. However, if you keep in mind that vapor intrusion is another component of damage to the environment you must remedy as a responsible party, you may have a convincing case for coverage. 

DEFENSES TO COVERAGE – LATE NOTICE AND PREJUDICE
After figuring all of this out: 

1. If there is an initial grant of coverage under the language
2. If there was a claim
3. If there was damage  
4. If there was a suit
5. If there were any exclusions that would prevent coverage 

…and you have an RP Letter in an authority where it is considered a suit, your next step is to figure out if the insurance carrier has any other defenses based upon either the language or the caselaw that can allow the insurer to potentially get out of covering you. In almost every one of these cases, the primary defense they have is “Late Notice and Prejudice.”  

A good example of this is if damage happened in 1975, and it was found when you sold the property in 2015, that may be considered untimely notice. If the tender of the claim is late and lateness varies by authority, the insurer may try to get out. There is a statutory definition in a lot of jurisdictions that says if any claim is tendered to the insurance carrier more than two years after the occurrence (or another specified deadline), the insurance carrier can say that it is “late.” Some jurisdictions will hold that if the tender of the claim is “late,” by the statutory definition or within the contract, that is a complete bar to making a claim.  

Most jurisdictions take a slightly different interpretation to “late notice.” In most cases, if the tender is late, you can still make the claim, but it is now the insured’s obligation to convince the court that there has been no prejudice against the insurance carrier’s rights because of the notice being late. To explain prejudice, we will use a car accident as an example. After a car accident, if you do not tell the insurance carrier about the accident, the scene gets cleaned up, nobody took pictures, and you did not get all the witnesses’ information, the insurance carrier’s ability to investigate what happened is prejudiced. They do not have the ability to make a good coverage determination because of lost information and the failure to give them notice in time for them to do their investigation. 

But that standard issue of prejudice does not apply with the same force when it comes to environmental contamination because we know that the contamination may have occurred long before the insured was even made aware of it. When that happens, the ability to investigate was not there at the time of the occurrence, because the owner did not know that the contamination was there. Then, there is the question of when the insured got notice of the contamination — which is normally during a real estate transaction—when the insured did their own investigation of the contamination, and when they put the insurance carrier on notice.  

That is a more crucial potential period for “prejudice” because, during that time, the plume is migrating with the property owner’s knowledge. Was the insurance carrier and their failure to get notice an impediment to investigating and potentially remediating the extent of the contamination? And did the contamination get worse over the course of that period? If during that period between discovering the contamination and tendering the claim to the carriers, you were working with regulators and an environmental consultant to investigate and remediate the contamination, the insurance carrier has a solid argument that they were prejudiced. Therefore, you should always put the carriers on notice quickly. The insurance carrier’s claim that they were prejudiced is going to ring hollow if you put them on notice at the beginning of this process.  

Another important piece of this is the costs that you incurred for the investigation prior to tender of the insurance carrier are not recoverable. This means the longer you wait to put your insurance carrier on notice the bigger the expense that cannot be recovered. It is not completely impossible to recover these costs, but it is difficult. Most insurance carriers will say, “anything that occurred pre-tender—before you gave us notice – no chance.” That applies in respect to anything that falls within the scope of the “duty to defend.” If it is work that is done pre-tender, you really must make a good argument that it is part of the carrier’s “duty to indemnify,” and to reimburse you for that loss.  

DEFENSE VS. INDEMNITY
What is Defense vs. Indemnity? The big issue is not paying the attorney’s fees. This is well understood as being part of the defense cost. It is whether the consultant’s costs to do the investigation of the site are covered by the policy as a part of the “duty to defend.” The reason this distinction is important is that the “duty to defend” is uncapped. There is no limit to how much an insurer may have to spend to defend a case. However, there is a limit on how much they would have to indemnify the insured for. 

You may have a million dollars in coverage for indemnity, and you also have a duty to defend, so many times, the investigation of a site itself can cost well more than that indemnity limit itself. Are the consulting costs to conduct the investigation part of the defense of the claim or are they a part of the indemnity limits? On one hand, the letter from the regulator says, “investigate this site and then remediate it,” and insurers argue that the investigation is being ordered by the government, so it is part of the indemnity obligation. Some courts have addressed this issue while many have not addressed it, so it is subject to discussion with your insurer in your state as to how they are going to handle it. Getting the consulting costs covered as investigation costs as part of the defense obligation allows you to learn about the environmental conditions of your site. Are there other responsible parties? When did the releases occur? How did they occur? How do you limit the liability that you are going to be obligated to pay for at your site? This is a critical issue in understanding how much coverage you will receive from your policies based on your state.  

OTHER CONSIDERATIONS
Duty of Cooperation
You must cooperate with your carrier. If they ask you questions, you must answer them, and you must provide them with information. Otherwise, they can claim that you did not cooperate with them. 

Voluntary Assumptions of Liability
Another way of saying this is agreeing to everything before the insurance company is even on notice of the claim because that can be argued as a defense for them as an assumption of liability. This does not include reporting an environmental contamination to your state regulator. 

Lost Policies-evidence of insurance
This is a state-by-state consideration of what type of evidence you will need to show to prove coverage of insurance. What constitutes adequate secondary evidence of insurance?  

Private causes of action against other responsible parties
Were there other polluters on the property before you? What actions will your team need to take to find these other responsible parties and compel them to share in the liability costs?  

Participation in State Cleanup Funds
Some states have cleanup trust funds to help pay for environmental cleanup. Ask your environmental consultants and attorneys how to access these funds while also utilizing your old insurance.  

These are all things to think about as you enter this process of finding your old insurance. What we hope you understand is that locating this old coverage should be celebrated, but it is one battle in an even bigger war. Make sure you have experts by your side that can prove the existence of coverage, tender the claim with your insurers, and put together a compelling legal argument based on the language of the policies and your state’s unique interpretation of the law. The extent to which you utilize these resources will play a key role in deciding how much environmental cleanup your insurance will cover.  

Learn more about our insurance archeology services.  

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*There is caselaw in New Jersey that the insurance carriers have used to argue that they do not have to pay for “defense” upfront. That has the potential to derail a project because there is a substantial difference between fronting the money for environmental investigation for the defense of a claim versus having the insurance carrier pay for it upfront. Getting reimbursed at the end after you have fronted what can sometimes be hundreds of thousands of dollars is a lot harder to deal with.  

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Dru Shields, Director of Drycleaner Accounts
For over 10 years, Dru has helped numerous business and property owners facing regulatory action, navigate and manage their environmental liability. Dru has vast experience in assisting dry cleaners in securing funding for their environmental cleanups through historical insurance policies. Dru is a member of numerous drycleaning associations in addition to serving on the Midwest Drycleaning and Laundry Institute (MWDLI) advisory council and on the Drycleaning & Laundry Institute Board (DLI) as an Allied Trade District Committee Member. 

 

Andrew Skwierawski, Senior Attorney
Andrew Skwierawski has over 12 years of legal experience. He combines that with a background as a veteran software developer and small business owner with his technical and scientific-focused law practice that includes environmental litigation, e-discovery, complex commercial disputes and municipal compliance. Andy’s environmental litigation work for Davis|Kuelthau has included representing manufacturers, property owners, farmers and environmental organizations. Andy represents drycleaners at dozens of sites across the State to address historical site contamination with the Wisconsin DNR as well as resolving insurance coverage disputes with their insurers.  

 

Ted Warpinski, Shareholder
Ted Warpinski has over 30 years of experience working on a wide variety of environmental and litigation cases across Wisconsin. From the early years of Superfund litigation on sites like the Fadrowski Drum Disposal Site in Franklin, Wisconsin and the Moss-American Site in Milwaukee, Ted has been immersed in both the legal and technical aspects of environmental law. Ted’s litigation practice has grown to include environmental nuisance claims and toxic tort litigation, contract and property disputes, construction defects, insurance coverage litigation and enforcement actions. Ted also works very closely with the firm’s real estate and development lawyers handling due diligence investigations and environmental permitting. His experience includes addressing real estate deals that involve brownfield issues, where the risk of liability for historical contamination is a major consideration. Ted’s experience allows him to assist the Davis|Kuelthau team with understanding and managing these risks.

POLICYFIND’S NEW EXPRESS SERVICE CAN HELP EVALUATE THE POTENTIAL OF YOUR DRYCLEANING BUSINESS’S INSURANCE ASSETS AS A PRECURSORY SEARCH. THIS SERVICE PROVIDES INSIGHT INTO POLICY POTENTIAL TO HELP PAY FOR AN ENVIRONMENTAL CLEANUP.

BY: DRU SHIELDS

We’ve seen a number of adjustments within the drycleaning industry over the years. Many drycleaners are adding new and convenient services for their customers, some have consolidated their shops to either merge with other businesses to expand their footprint or to focus on routes out of one location, and some have decided to close their doors altogether.

Due to these changes in plans, we have seen an uptick in drycleaners addressing environmental contamination due to an increase in real estate and business transactions. With this uptick, we’ve also seen an increase in demand for PolicyFind’s insurance archeology services.

Insurance archeology is the process of locating and reconstructing historical insurance coverage to find funds that help pay for environmental cleanup and legal defense against liabilities. A full insurance archeology review has historically been a more expensive endeavor for drycleaners. However, this investment can ultimately help offset hundreds of thousands and even millions of dollars in environmental cleanup costs and legal fees.

In response to a need from the drycleaning industry to reduce the cost for insurance archeology, we have created a new service line called Insurance Archeology Express (IAX) which provides our clients an expedited baseline insurance research product. It is a faster and more affordable first step that helps our insurance archeologists determine the likelihood that a full insurance archeology service will yield insurance coverage for liability issues, such as environmental contamination. IAX is a great option for many drycleaners because it will give you an idea of whether a full insurance archeology could be successful.

Here are two scenarios from drycleaners we’ve worked with recently.

SCENARIO #1: MULTIPLE DRYCLEANING PROPERTIES WITH VARIED HISTORIES
I worked with a drycleaning client who had five locations, four of which had historically been perc drycleaning plants at one point in their existence. Many of them had been plants back in the 60s and 70s, and all but one had eventually transitioned into drop stores. All of these locations had been owned by various operators prior to our client taking them over. As he was looking to refinance his properties, he realized that he was going to need to conduct environmental due diligence to satisfy his lender and that this was likely going to open some environmental issues for him. He understood that even if he put the refinance on hold, this was still going to be the case in the future should he go to sell, so he decided it was in his best interest to start now.

Since conducting a full insurance archeology on each of the four locations would have been expensive, we conducted an IAX search on each. We were able to determine that three of his four sites were good candidates for full insurance archeology. This meant that the baseline research conducted by our insurance archeologists determined that there were enough paths that could lead to evidence of insurance. For the fourth site, it was determined that while former owners and historic operational history was identified, no clear paths to insurance were. With this information, our client decided to pursue full insurance archeology on those three sites.

SCENARIO #2: DRYCLEANER ON A TIGHT DEADLINE WITH PENDING ENVIRONMENTAL NEEDS
Another IAX client is a drycleaner who recently was notified by their state’s environmental regulatory agency that contamination was found migrating onto a neighboring property. The client was given a short deadline for providing the state with their plan for beginning investigation into environmental contamination as well as addressing any immediate vapor intrusion concerns at nearby properties. This drycleaner had been operating at their location since the 1970s but was unable to produce any old business records for review. They were concerned with committing to a full insurance archeology search because they were on a limited budget and were on such a short deadline. Similar to the first scenario, our insurance archeologists were able to show that there were a number of avenues to pursue that could provide evidence of insurance.

Do either of these scenarios sound similar to your situation? The desire to know if there may be funding before committing 100% makes total sense and our IAX offering is our way of providing that snapshot into your unique insurance asset situation.

In addition, all IAX clients who want to take the next steps to further research and to reconstruct historical coverage, the cost of IAX can apply to the cost of PolicyFind’s insurance archeology services. It should also be noted that IAX is a very specific service line and we recommend that you talk with our insurance archeologists to determine whether IAX is a fit for you. There are some situations in which this service line may not be practical and there may be other options that would better suit you.

If you find yourself in a time crunch, interested in having a better sense of what your odds will be before you enter into a full insurance archeology agreement, IAX may be the perfect solution for you.

Contact us today to review your drycleaning business’s scenario with insurance archeology and environmental service experts.

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Dru Shields, Director of Drycleaner Accounts
For over 10 years, Dru has helped numerous business and property owners facing regulatory action, navigate and manage their environmental liability. Dru has vast experience in assisting dry cleaners in securing funding for their environmental cleanups through historical insurance policies. Dru is a member of numerous drycleaning associations in addition to serving on the Midwest Drycleaning and Laundry Institute (MWDLI) advisory council and on the Drycleaning & Laundry Institute Board (DLI) as an Allied Trade District Committee Member.

ADDRESSING ENVIRONMENTAL ISSUES FOR A DRY CLEANING BUSINESS CAN GET EXPENSIVE. TO HELP DEFRAY THE COST, SOME STATES HAVE CLEANUP TRUST FUNDS FOR DRY CLEANERS TO PAY INTO AND EVENTUALLY USE. AS OF NOVEMBER 2019, THOSE STATES ARE ALABAMA, CONNECTICUT, ILLINOIS, FLORIDA, KANSAS, NORTH CAROLINA, OREGON, SOUTH CAROLINA, TENNESSEE, TEXAS, AND WISCONSIN.

BY: DRU CARLISLE

While it would be ideal to rely on these funds alone to pay for necessary investigation and remediation services, it’s not always the most viable option because while there are certainly strong funds still in operation, we have seen that some funds are considering sunsetting, and with others, reimbursement payments are being delayed.

Another or additional solution for dry cleaners is to track down their historical Commercial General Liability (CGL) insurance policies. By locating these policies, a dry cleaner can use them as assets (money) to help cover the costs associated with environmental investigations and cleanups, such as investigation, remediation, and legal fees. We’ve been assisting dry cleaners in states with and without trust funds through this process for over two decades.

Here are some common questions we hear from the dry cleaning community about state cleanup funds.

1. WHAT CAN DRY CLEANERS IN STATES WITHOUT ADEQUATE CLEANUP FUNDS DO TO GET HELP WITH FUNDING THEIR CLEANUPS?
The first thing that a dry cleaner should do is look for all of their old insurance policies. Typically, the older the policy, the fewer restrictions they have regarding covering environmental contamination claims. Generally, we need policies that were issued before 1985. Dry cleaners should look through all old bank records, and write down the name and company of all insurance brokers they have worked with. Secondly, they should jot down a history of when they started at the location, who they purchased insurance from, what types of stores were at that location (or adjacent) and what other insurance was part of the property. They will also need to identify whether or not there was a previous dry cleaner who may have caused or contributed to contamination. Finally, we recommend not moving forward without expert advice. Often times if a dry cleaner launches into a cleanup without notifying insurance carrier(s), they will not be reimbursed for money spent on the site investigation and cleanup.

2. WHY ARE INSURANCE CLAIMS SO SIGNIFICANT IN TRIGGERING INSURANCE COVERAGE?
Making a valid claim to your carrier can mean the difference between paying hundreds of thousands of dollars for a site cleanup compared to paying a small amount for startup costs like. In most instances, a valid claim made to an insurance company will be defended. Among other things, this defense can include legal fees and site investigation activities.

3. SHOULD A DRY CLEANER PAY OUT-OF-POCKET EXPENSES FOR A CLEANUP THEN LATER TENDER A CLAIM TO RECOVER THAT LOSS OF EXPENSES?
Depending on the state, it is common for an insurance carrier to decline paying costs incurred before a claim was tendered. We have had several clients that spent money on investigations and cleanups, but were only reimbursed a fraction of their costs because the insurance carriers felt they could have managed the work differently and cheaper.

4. IF A DRY CLEANER IS WAITLISTED FOR A CLEANUP FUND, CAN HE OR SHE PROCEED WITH THE SALE OF THE BUSINESS? WILL THE VALUE OF HIS OR HER BUSINESS BE ADEQUATELY PROTECTED?
In many states that have cleanup funds, a prospective purchaser agreement (PPA) will allow a property transaction to proceed prior to a regulatory release and sign off of no further action. However, a PPA generally does not remove any contingent liabilities associated with the dry cleaning site; but instead delays the inevitable site investigation and potential cleanup. It also allows the purchaser more time to discover any additional problems that the seller’s are often responsible for.

Furthermore, the involvement of a dry cleaner in a fund does not remove any contingent environmental liabilities from the site itself, nor does it fully protect the dry cleaner from any potential actions that might arise from contamination. These issues could include diminished values to property or to other properties that might be affected by contamination coming from the site. Also, the cleanup funds do not fully protect a dry cleaner from a citizen or third party suit associated with contamination coming from his/her site.

Learn how to sell your dry cleaning business in three steps

5. HOW CAN DRY CLEANERS IN STATES WITH CLEANUP FUNDS EVALUATE WHERE THE BEST FUNDING IS FOR THEM?
Such funds may best be used for either actual cleanup efforts, known as remediation, for which insurance dollars are generally more difficult to recover, or for sites at which such insurance dollars or other responsible parties cannot be identified. Cleanup fund dollars may also provide seed money to perform any insurance archaeology or pay for other efforts that can identify where dollars for cleanup may be found. The bottom line is that a fund with enough money to pay for cleanups is a good thing. However, the problem is that most states do not have enough money in the fund to cover the necessary cleanups at this time.

6. WHAT WOULD BE AN IDEAL SITUATION FOR A DRY CLEANER WHO HAS ACCESS TO A STATE CLEAN-UP FUND AND INSURANCE COVERAGE?
An ideal situation is a fund that allows dry cleaners to pursue any and all avenues to bring dollars to the table and be available as a safety net for cleaners that do not have other avenues to pursue. Ideally the fund would be used to seed initial efforts, such as finding insurance dollars to bring to the table. We have had situations where the historical insurance paid the deductible required by the fund, the fund monies kicked in and the insurance addressed dollars above the fund limit.

See how one dry cleaner’s state funding challenges were solved by insurance archeology

7. WHY SHOULD DRY CLEANERS FEEL CONFIDENT ABOUT THEIR ABILITY TO FIND HELP WITH CLEAN-UP WHEN STATE CLEANUP FUNDS ARE NOT AVAILABLE OR ARE NOT FINANCIALLY ADEQUATE?
Our experience has been that dry cleaners, particularly dry cleaners that have been at their site since at least the early 1980’s, have an excellent opportunity to get the site investigation and remediation paid for by either their old insurance companies or other responsible parties. We have even conducted individual site investigations costing over $2,000,000 at no cost to individual dry cleaners by using liability insurance policies from the 1980’s to pay for contamination problems. After successfully working on over 200 dry cleaning sites nationwide, we have helped settle over $500,000,000 in insurance coverage claims, including individual projects in excess of $44,000,000. There’s no reason why contamination has to destroy the value of a dry cleaning business when there are viable solutions available.

To find out if historical insurance assets are an available funding avenue for you, contact us for a confidential consultation.

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Dru Carlisle, Director of Drycleaner Accounts
For over 10 years, Dru has helped numerous business and property owners facing regulatory action, navigate and manage their environmental liability. Dru has vast experience in assisting dry cleaners in securing funding for their environmental cleanups through historical insurance policies. Dru is a member of numerous drycleaning associations in addition to serving on the Midwest Drycleaning and Laundry Institute (MWDLI) advisory council and on the Drycleaning & Laundry Institute Board (DLI) as an Allied Trade District Committee Member.

LEARN HOW OLD INSURANCE POLICIES CAN BE USED AS FUNDS TO PAY FOR ENVIRONMENTAL INVESTIGATION, REMEDIATION AND LEGAL COSTS.

BY: STEPHEN HENSHAW & DAVID O’NEILL

Once I met with a dry cleaner who said he had gone to the attic in search of his old business package policies. He explained that he had no idea before visiting an attorney that these old expired insurance policies could be of any use to him. Since they were package policies, they contained multiple lines of insurance. Parts of the policy provided coverage against damage to his building, against break-ins, storm damage and even workers compensation coverage. As far as he knew all of this coverage had long ago expired. Why would he still have copies of these old policies? There was no reason, he thought, that he would want to have kept them. They would have to be in a box or two that he had neglected to put in the dumpster.

LEARNING THE VALUE OF OLD COMMERCIAL GENERAL LIABILITY POLICIES IN ENVIRONMENTAL CLEANUPS

He had been told by his attorney to look for that part of the policy that addressed damage to the property of others. Not damage to others he might do in his delivery van. That was covered under the automobile insurance section of the policy. Rather, it was the part of the policy that covered his customers (the slip and fall coverage) that he was looking for. His attorney had told him that part of the old package policies could provide him the coverage he needed now to address the environmental contamination on his property from perchloroethylene (Perc) spills below ground that had occurred years earlier.

THE IMPACT OF PERC SPILLS WHEN REFINANCING A PROPERTY

It was these Perc spills that apparently had caused all the trouble. The landlord, a strip mall owner, had been refinancing and the bank required that he conduct a simple environmental audit that had included soil sampling. The samples had shown Perc in the soil at his end of the strip mall. The landlord was going to have to clean this up to get his refinancing. The cleanup would be expensive and the dry cleaner was expected to take care of the bill because he was the one who had accidentally put the Perc into the soil over the many years of his operation there. The attorney had assured the dry cleaner that this was indeed legal. The law in his state required that “the polluter” remove the pollution or at least reimburse the landlord if he had to have it done. Up until this time, the dry cleaner had not considered himself a polluter–it was a new role he was going to have to get used to before this nightmare would be over.

UTILIZING OLD CGL POLICIES TO FUND ENVIRONMENTAL CLEANUP

His attorney had explained that in his state, as in most states, it took policies issued before 1986 to pay for environmental investigations. This was because the later policies contained pollution exclusions that the courts in his state recognized as barring coverage for Perc spills. Paying the landlord’s environmental experts was likely to be too great for the dry cleaner to handle. After years of operating a successful business, he had significant savings, but these ongoing costs could deplete that savings account in no time. He may even need to consider bankruptcy unless he could find those insurance policies issued before 1986, and successfully file claims that would require his insurers to step in and defend him.

Learn more about old CGL policies by visiting Historical Commercial General Liability (CGL) Policies 101

CALLING IN THE INSURANCE ARCHEOLOGIST

Digging around in the attic, he succeeded in finding one collection of old policies, but these policies dated only to the late 1990s. Telephoning the insurance agent identified on the policies, the dry cleaner found that that insurance agency was no longer in business. Despairing, he reported his lack of success to the attorney, prepared to discuss bankruptcy instead of insurance recovery. However, the attorney suggested another option. He suggested that the dry cleaner hire an insurance archeologist to see what insurance might be located elsewhere.

Working backward from the earliest insurance policy, the insurance archeologist was able to discover that another insurance agency had purchased the defunct agency’s book of business prior to closing.

Contacting that insurance agency, the archeologist found that old policy files no longer existed, but that the agent would permit him to review his old accounting files. A review of these files identified some premium notices issued to the dry cleaner in 1985. These notices identified the policy numbers, dates and insurance carrier.

The insurance archeologist provided a specimen policy issued by the same insurance carrier to a different dry cleaner in his state from the 1985 policy period. This policy had a pollution exclusion on it but that exclusion, the attorney advised, was not a bar to coverage as long as the Perc releases had not been intentional, and had been “sudden and accidental.”

Using the premium notices and specimen policy together, the dry cleaner’s attorney was able to file a claim with the insurance company. The company stepped in to defend the dry cleaner, paid his attorney fees and paid the landlord’s environmental experts.

THE MORAL OF THE STORY

Don’t give up. Get some professional help and look under every rock. Ask your attorney about how insurance archeology can help you locate the records you need to defend against environmental claims.

To find out if you have historical assets, contact us for a Confidential Insurance Archeology® consultation.

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As seen in Cleaner and Launderer

Stephen Henshaw, Founder at EnviroForensics & PolicyFind has over 30+ years of experience and holds professional registrations in numerous states. Henshaw serves as a client manager and technical manager on complex projects involving contaminated and derelict properties, creative litigation, deceased landowners, tax liens, non-performing banknotes, resurrecting defunct companies and cost recovery. Henshaw’s expertise includes a comprehensive understanding of past and current industry and waste handling practices and the fate and transport of chlorinated solvents in soil and groundwater. He has served as a testifying expert for plaintiffs and defendants on high profile cases involving causation and timing of releases, contaminant dispersion, allocation, damages, past costs, and closure estimates. He has a strong knowledge of state and federal regulations, insurance law, RCRA, and CERCLA. He has managed several hundred projects including landfills, solvent and petroleum refineries, foundries, metal plating shops, food processors, dry cleaners, wood treating facilities, chemical distribution facilities, aerospace manufacturing facilities, and transporters and provides strategy instrumental in funding projects and moving them to closure.

David O’Neill, JD, Director of Investigations at PolicyFind has 30+ years of experience in claims recovery on behalf of corporate policyholders involving environmental property damage and toxic tort and asbestos exposure claims. O’Neill has extensive experience in locating and retrieving insurance coverage evidence on behalf of potentially responsible parties responding to environmental investigation and remediation demands. His former investigative work includes unique matters involving Holocaust victims rights, mergers & acquisitions of a national landfill operator, and on matters involving national archives.

Insurance archeology solves funding issues for a dry cleaner who was distressed by the lack of effectiveness of his state’s environmental response fund.

 
This is the story of a Wisconsin dry cleaner who wanted to retire, but his property was plagued with environmental contamination and funding challenges despite his enrollment in Wisconsin’s Dry Cleaner Environmental Response Fund (DERF). Here’s how he found a way to get his unsellable property clean and ready for redevelopment.
 

The Discovery of PERC Contamination

The dry cleaner was in operation from 1968-2001 and throughout that time tetrachloroethene (PERC), a dry cleaning chemical, was used to clean its customers’ clothes. PERC became a common dry cleaning chemical in the 1930s and is now less frequently used in dry cleaning operations due to concerns for worker health and the environment.
 

Engaging the DERF

In 2001, the dry cleaner decided to retire and utilize the Wisconsin DERF so he could sell his business. The fund was contributed to through a license fee and a solvent fee by dry cleaners. Luckily, the dry cleaner owner contributed to the DERF program while in business and was eligible to utilize the funds for his investigation and remediation. 

In hopes of selling his dry cleaning business to a buyer, he had to conduct an initial environmental investigation to begin the environmental due diligence process and gain access to his DERF reimbursements.
 

Working with the State’s Environmental Response Trust Fund

From 2002-2011, the dry cleaner paid for his clean up activities out-of-pocket while waiting for his reimbursements to come through from the DERF program. He contracted an environmental firm to conduct Phase I and Phase II Environmental Site Assessments (ESA), but the environmental firm’s work was constricted to a very slow pace due to the slow payments from DERF. 

By 2014, the dry cleaner was well into his retirement and was no longer running his business, but he still needed to clean up the environmental contamination in order to sell the property. After spending roughly $250,000 out-of-pocket for his environmental investigation and remediation work, he had completely run out of personal funds. He could no longer pay for any additional work upfront and he could no longer wait on reimbursements from DERF.

Learn how state-funded environmental cleanups programs are being phased out.

 

Contacting local dry cleaning association for help

After the frustration the dry cleaner experienced with the DERF program, he contacted the Wisconsin Fabricare Institute (WFI), part of the national Drycleaning and Laundry Institute (DLI), for help on how to get him through this predicament. WFI recommended contacting EnviroForensics and its insurance archeology division, PolicyFind to find alternative funding sources.
 

Engaging with EnviroForensics

PolicyFind conducted insurance archeology to locate the dry cleaner’s old insurance policies. They evaluated the dry cleaner’s historical commercial general liability (CGL) policies and developed an insurance claim strategy to access funding that could be used to complete the environmental investigation and remediation–so he could finally sell his property. 

To recap, in order to solve the dry cleaner’s financial challenges, PolicyFind:

1. Conducted Confidential Insurance Archeology® to find the insurance coverage that would pay for the cleanup.
2. Tendered the insurance claim with the insurance carrier, which led to the carrier confirming that the insurance would pay for the environmental work.

The switch from using DERF funds to historical insurance coverage to pay for the environmental work allowed the dry cleaner to finally clean up his property, which was a precursor for being able to sell his property.
 

The environmental investigation and remediation process

Once the insurance archeology funds were secured, EnviroForensics completed the remaining site investigation activities which included soil and groundwater delineation as well as vapor intrusion assessments. The results showed that there was soil contamination, which required additional remediation to gain site closure. Geologists and engineers developed a remediation plan to demolish the building and remove the existing contamination. EnviroForensics conducted a soil excavation and removed approximately 400 pounds of PERC and 670 tons of contaminated soil.

 

After the remediation, EnviroForensics completed a Phase I ESA to prepare the property for resale and helped the former dry cleaner find an investor to purchase the property, who took on the remaining environmental liability, which included ongoing environmental monitoring.
 

EnviroForensics helped find a buyer

Since the majority of the environmental work was complete and the CGL insurance policies had enough funding for the ongoing environmental monitoring, the investor felt comfortable working with EnviroForensics to settle the environmental claim and continue cleaning up the property.

 

A New Life for the Property

The ongoing site work facilitated the sale of the property and future redevelopment plans are underway for potential reuse as a commercial office building. 

The former dry cleaner site is nearing the end of its investigation and remediation work. The closure of the site, under the Wisconsin Department of Natural Resources (WDNR), is anticipated after minor investigation follow-up activities and continued environmental monitoring by 2021.

EnviroForensics is the most trusted environmental consultant in the dry cleaning industry. Learn more about our services for dry cleaners.

 

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EnviroForensics^® is a full-service environmental consulting firm that has cleaned up more dry cleaning sites than any other firm. We’re the only firm that focuses on finding the money to pay for investigation, cleanup, and legal fees. We restore the value of your property while protecting you from regulatory and legal issues.

STATE TRUST FUNDS INTENDED FOR CLEANING UP DRY CLEANER SITES HAVE BEEN GREAT TO RELY ON. HOWEVER, MANY HAVE FALLEN ON HARD TIMES.

BY: DRU CARLISLE

Some Funds are either running out of money or have already sunset. What is the dry cleaning industry turning to for the money needed to respond to environmental liability? Dry cleaners are increasingly using their historical insurance policies to pay for environmental cleanup claims—protecting their business from financial ruin or bankruptcy.

The dry cleaning industry has seen more than its fair share of costly and complicated environmental contamination issues. In the past, eligible dry cleaners in almost 25% of the United States have been able to use money from state trust funds that were established solely for this purpose. Unfortunately, these state trust funds have proven to be not sustainable in most situations, and the number of available funds is declining. In the coming years, it’s anticipated that those looking to the state fund programs will experience even more delays in reimbursement of money already spent out-of-pocket, and or will lose the fund altogether.

Who is potentially impacted by this news? Any dry cleaner in Alabama, Connecticut, Illinois, Florida, Kansas, Missouri, North Carolina, Oregon, South Carolina, Tennessee, Texas, or Wisconsin.

This is frightening news for dry cleaners in these states, who are liable for cleaning up environmental contamination caused by cleaning solvents like PCE (Perc) or TCE. However, another financial solution is still available to dry cleaners—their historical Commercial General Liability (CGL) insurance policies. By finding their historical insurance policies, dry cleaners can use them as assets to help pay for their environmental investigation and cleanup. Those residing in states without trust funds have been doing it for years.

HOW CAN DRY CLEANERS USE HISTORICAL INSURANCE POLICIES TO PAY FOR ENVIRONMENTAL CLEANUPS?
Historical insurance policies are valuable assets that you can use to get money to pay for resolving environmental issues.

Commercial general liability (CGL) policies provide coverage to businesses for bodily injury, personal and property damage caused the business’ operations, products, or injury that occurs on the business’ premises. Most every business has old CGL policies since they are commonly purchased as a necessity to cover potential costs incurred by defending and reasonably resolving suits seeking to hold them liable for alleged bodily injuries or property damage.

Historical Commercial General Liability (CGL) policies from before 1985-86 typically don’t have a clause that disallows coverage for releases of contaminants. This means that if a dry cleaner can find their or their predecessor’s old insurance assets, then those policies can pay for the environmental investigation and cleanup required by the state’s environmental regulatory agency. Additionally, the policies would likely protect dry cleaners from any neighbors who decide to sue them for damage to their property. These policies also entitle dry cleaners to hire an environmental defense attorney at no charge and receive insurance payments immediately without upfront payments, unlike most state trust funds.

Once triggered historical commercial general liability (CGL) policies can be used to recoup or pay for 1) site investigation, 2) remediation/cleanup, 3) interim remedial measures, 4) building a legal case, 5) responsible party search, 6) interfacing with agencies, 7) defense against legal claims, and 8) legal fees. To learn more about CGL policies, visit How Does It Work? CGL Policies and Insurance Archeology.

HOW DO YOU FIND OLD INSURANCE POLICIES?
Insurance archeologists conduct insurance archeology to find lost or misplaced liability insurance policies that can defend and indemnify policyholders against claims such as environmental property damage claims.

EnviroForensics® is the nation’s leader in finding and using historical insurance coverage. Our insurance archeology division, PolicyFind™, has decades of experience identifying and locating lost, mislaid, or destroyed liability insurance policies for policyholders. 

First, insurance archeologists retrace the genealogy of historical insurance coverage to identify past owners and operators who may have contributed or caused personal injury or environmental damage. 

Next, they use an extensive specimen policy library to help confirm terms and conditions, research data services, and physical file searches to follow leads and locate evidence of old insurance policies. 

And finally, the results of the insurance archeology process are assembled into insurance coverage charts, which visually reconstruct the CGL insurance policies.

The rebuilding of historical land use and insurance can limit the liability of individual clients. Initiating coverage from these policies thereby creates an alternative funding source, which can protect a business from severe financial loss and even save a company from bankruptcy. 

“If historical insurance policies are lost or misplaced, PolicyFind’s expert insurance archeologists will find the needed evidence of their existence and create a legally defensible historical insurance coverage chart—saving a dry cleaner’s livelihood,” says Jeff Carnahan, President of EnviroForensics.

Once identified and brought to light, the coverage provided by old insurance policies can be used to hire an environmental consulting firm with specialized expertise in serving the dry cleaning industry by cleaning up its historical environmental pollution problems.

HOW ENVIROFORENSICS CAN HELP
EnviroForensics® is the nation’s leading environmental engineering firm serving dry cleaners. EnviroForensics is the only full-service environmental firm that performs insurance archeology to locate money to pay for environmental investigation, cleanup, and legal fees. EnviroForensics helps clients get their cleanups paid for without significant cost to the clients or their businesses while restoring their property to fair market value.

To find out if historical insurance assets are an available funding avenue for you, contact us for a confidential consultation. 

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Dru Carlisle, Director of Drycleaner Accounts
For over 10 years, Dru has helped numerous business and property owners facing regulatory action, navigate and manage their environmental liability. Dru has vast experience in assisting dry cleaners in securing funding for their environmental cleanups through historical insurance policies. Dru is a member of numerous drycleaning associations in addition to serving on the Midwest Drycleaning and Laundry Institute (MWDLI) advisory council and on the Drycleaning & Laundry Institute Board (DLI) as an Allied Trade District Committee Member.

LEARN HOW POLICYFIND USES INSURANCE ARCHEOLOGY TO PUT THE POWER OF THE CGL POLICY BACK IN THE HANDS OF THE POLICYHOLDER

BY: KRISTEN DRAKE

Over 25 years ago, EnviroForensics and PolicyFind’s CEO Steve Henshaw, P.G. discovered the power contained within historical commercial general liability (CGL) insurance policies in the face of a lawsuit or an environmental issue. Henshaw discovered and has since proven, that using a company’s historical CGL insurance policy is an effective funding source to pay for the expensive cost of investigating and cleaning up environmental contamination.

WHAT ARE COMMERCIAL GENERAL LIABILITY INSURANCE POLICIES?

CGL insurance policies are purchased by business owners to cover them against their business’ liability exposures. This is very important in determining whether an individual or business’ old insurance policies can be used to pay for environmental investigations and clean-ups.

This makes CGL policies very important protection for corporate policyholders because they broadly provide defense and indemnity coverage against claims for bodily injury and property damage. Coverage includes products, completed operations, premises, and operations, elevators, and independent contractors, to name a few.

HOW DO “HISTORICAL” COMMERCIAL GENERAL LIABILITY INSURANCE POLICIES WORK?

In general, CGL policies have included and even excluded environmental pollution and contamination language like “unexpected and unintended releases.” Such unexpected and unintended releases mean accidental releases or accidental spills, not intentional releases, which would be better defined as dumping or disposing. CGL policies were not covering individuals and businesses for pollution or contamination associated with dry cleaning operations. A separate environmental policy would be required to cover environmental pollution and contamination.

So, if you or your business bought CGL insurance before the policies contained absolute pollution exclusion language, you are likely to have insurance coverage that can address environmental contamination, even if that contamination has only been recently discovered.

In addition, old policies provide a defense against a claim or suit. In some states, a claim or suit could be a letter from the regulatory agency or a neighboring property owner demanding a response to identified environmental contamination. In other states, the courts have determined that the insurers must only defend an actual lawsuit.

‘OK’, you might ask, ‘that sounds great, but what if I can’t find my old policies or policies that were bought by the former owners?’ Well, those old policies can still be found. While there is no guarantee, contacting an expert insurance archeologist increases your chances of finding old policies or evidence of old policies. PolicyFind, a division of EnviroForensics, boasts an 85% success rate at finding old insurance policies or evidence of old policies.

USING YOUR POLICIES FOR DEFENSE AND INDEMNIFICATION

After finding the old policies, it is then critical that you know how to use these policies to your benefit. Insurance law is different from state to state and not every state has good law for the policyholder. Insurance policies contain different language which can vary by carrier and by policy period.

In pulling this concept together:

• A defense includes paying for lawyers dealing with the environmental contamination. A defense would also include quantifying an individual or business’ exposure and liability. The only way to quantify environmental liability is to collect environmental samples (e.g. soil, soil gas, indoor vapor, groundwater). It would also mean determining how expensive a cleanup would be, which means that, aquifer tests, feasibility studies and remediation technology evaluation should be covered.
• Indemnification is the process where the insurer brings the insured back to where they were before the damages occurred, as stipulated within the insuring agreement. In other words, indemnification makes the insured ‘whole’ again by paying for damages or losses already sustained and expenses already incurred.

PRACTICAL APPLICATIONS OF YOUR CGL POLICIES

Historical insurance policies can be beneficial in providing coverage for a number of different situations. For example:

• Plumbing and building supply companies defending product liability claims from exposure to products sold containing asbestos.
• Municipalities involved in litigation.
• Manufacturers of pumps defending product liability claims from exposure to asbestos gaskets.
• Churches and schools defending personal injury claims.
• Dry cleaners defending against environmental property damage claims brought by neighboring business property owners.
• Business property owners defending property damage claims by state environmental authorities.
• Insurance companies defending policyholders against environmental property damage claims and wishing to document insurance coverage of other potentially responsible parties.
• Real estate developers, environmental consultants, attorneys and regulatory agencies.

WHAT YOU CAN USE CGL POLICIES TO FUND

The process of using old insurance policies has many parts. There may be an insurance archeology component, a legal component and an environmental component and they all have to work together. Understanding all aspects of the process is not your job, that’s why you hire experts to uncover your insurance assets.

EnviroForensics and PolicyFind have successfully used the historical insurance of businesses, individuals and even defunct and bankrupt companies as sources of funding to pay for the investigation and cleanup of contaminated sites.

There are billions of dollars in unclaimed assets available to parties looking to defend environmental claims and personal injury claims. PolicyFind works diligently every day to put the power of the policy back in the policyholder’s hands – where it belongs.

Call PolicyFind’s insurance archeology experts today at 866-888-7911 or fill out our form.

PolicyFind clients commonly face immense challenges and deadlines, and they rely on our strengths to provide solutions for them. Our team understands the unique set of circumstances that businesses face when liabilities from past business operations arise. With our help, they can overcome their inevitable feelings of anxiety, powerlessness, and uncertainty.

 

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Kristen Drake brings more than a decade of research and managerial experience in broadcast journalism to the field of insurance archeology. Since joining the PolicyFind team in 2015, Mrs. Drake has successfully documented liability insurance programs on behalf of municipalities, manufacturers and dry cleaners. She continues to translate her expertise in source procurement and digital fact-finding, performing insurance research activities at a very high level, providing on-time execution of contracted performance goals.