Engaged by policyholder counsel to analyze Pollution Liability coverage and underwriting issues following denial of a bodily injury claim from a carbon monoxide leak. Engagement required analysis of claims-made renewal underwriting, first party cleanup vs. third party liability, and bad faith claims handling issues. Attorneys David Newman and Brittany Armour, Hogan Lovells US, LLP (267) 675-4600. OQ Chemicals v. Lloyds, Civil Action No. 4:23-cv-01125 In The United States District Court For The Southern District of Texas, Houston Division.
Pollution Environmental Liability Insurance Expert Witness
Prior to 1973, standard Commercial General Liability policy forms did not exclude Pollution / Environmental claims. ISO’s first pollution exclusion in 1973 still covered claims arising from “sudden and accidental” discharge or release of contaminants or pollutants; but “sudden and accidental” was not defined. The lack of a policy definition for “sudden and accidental” became one basis for coverage disputes and litigation between policyholders and carriers. Various courts issued disparate rulings on the intent of “sudden and accidental” pollution incidents.
Pollution / Environmental Liability Insurance is most commonly written by specialty underwriters on manuscript forms specifically addressing pollution exposures. Given the exposure severity, policies are written on a Claims-made basis with strict terms and conditions of coverage.
Call (817) 980-4897 to discuss your case.
Industries with Pollution Exposures
Pollution liability incidents range from small fuel spills, to long-term asbestos exposure all the way to large-scale environmental impairment claims. Terms synonymous with pollution disaster include Love Canal, Bhopal and Deepwater Horizon, widely considered the largest pollution incident in petroleum industry history.
The array of industries dealing with Pollution liability exposures includes:
- Chemicals (manufacturers, mixers, distributors, Brownfields)
- Oil and gas (drillers, refineries, above ground & underground storage tanks, groundwater contamination)
- Construction (fuel spills, chemical applications, contaminated materials)
- Mining (hazardous tailings, Brownfields, contaminated runoff)
- Transportation (railroads, trucking, garbage trucks)
- Maritime (pipelines, hull rupture, oil/chemical spills, wetlands, Natural Resource Damages)
- Disposal and Recycling Facilities (waste handlers, landfills)
- Municipalities (water purification, wastewater, landfills, Port Authority accidents)
- Manufacturers (electronics, leaking storage tanks, product failure, asbestos)
- Medical (biohazard, radioactive waste, pharmaceuticals)
- Agriculture (dairy farms, fertilizer, storm water runoff)
- Food industry (grease traps, cooking fumes)
- Real Estate (tenant waste, sewage, fuel spills, Sick Building Syndrome)
- Hospitality (chlorine leaks, underground storage tanks)
- Professionals (engineers, environmental consultants)
To manage environmental risk, many industries utilize tools such as Phase I & II Site Assessments, Baseline Environmental Assessments and monitoring pollution levels of ongoing operations. Nonetheless, litigation arises from a variety of areas:
- Toxic torts.
- Environmental contamination.
- Chemical / Hazardous waste spills/releases.
- Groundwater contamination.
- Long-latent occupational diseases.
Environmental litigation commonly involves local, state, and federal agencies regulating:
- Hazardous waste (HAZMAT)
- Transportation of hazardous materials
- Mining / Minerals
- Oil & Gas waste byproducts
- Coastal and inland wetlands
- Remedial Action Plans
Governmental entities with enforcements authority to assess fines and penalties,
- Environmental Protection Agency (EPA)
- Federal Emergency Management Agency (FEMA)
- Occupational Safety and Health (OSHA)
Administer numerous environmental and pollution laws including the:
- Clean Air Act / Clean Water Act
- CERCLA: Comprehensive Environmental Response, Compensation and Liability Act
- Endangered Species Act
- Freedom of Information Act
- Resource Conservation and Recovery Act
- Toxic Substances Control Act
“Absolute” vs. “Total” Pollution Exclusions
Courtroom chaos resulting from the term “sudden and accidental” prompted ISO to introduce the “Absolute Pollution Exclusion Endorsement” in 1985. While “sudden and accidental” was deleted, pollution was still not “absolutely” excluded. Coverage was still provided for contractor pollution claims from contaminants brought to a working job site. Subsequent ISO forms extended pollution coverage for hostile fire claims and/or building damage caused by contractors.
ISO’s late 1980s “Total Pollution Exclusion Endorsement” was intended to exclude all claims for bodily injury and property damage whether caused “in whole or in part” by the discharge or release of pollutants. While one might assume this would reduce litigation over Commercial General Liability pollution exclusions, ample disagreements persist over the definition of “pollutant”, and there is still no universal interpretation of either an Absolute or Total pollution exclusion.
Coverage Triggers
Individual states regulate coverage triggers for long-tail pollution losses on pre-1973 General Liability policy forms, Rules differ by state, but generally fall in to 4 broad categories:
- Injury in fact trigger: Policyholder required to provide specific evidence of when contamination began, and prove contamination continued throughout the disputed time period.
- Continuous trigger: Policyholder must demonstrate a particular, harmful process occurred over a certain time period and simultaneously contaminated third-party property.
- Exposure trigger (limited number of states): Policyholder must demonstrate only that operations (as opposed to a particular process) continued over a given period of time; the court assumes that the pollution happened simultaneously.
- Manifestation trigger (not widely used): Triggers only CGL policy in effect at the time pollution was discovered; clearly conflicts with plain policy language. Our Experience with Pollution / Environmental Liability Insurance
Our Experience with Pollution / Environmental Liability Insurance
Mr. Daniel’s insurance career began in 1973, the same year Pollution Liability exclusions first came to the forefront. His experience includes dealing with various iterations of Pollution Exclusions in both ISO and carrier manuscript policy forms and endorsements. This expertise was developed from pollution liability placement and claims handling as a corporate risk manager and later as an agent, as well as from numerous Pollution Liability expert witness engagements.
Pollution / Environmental Liability Insurance Expert Witness Cases
Engaged by counsel for receiver/policyholder to evaluate Commercial General Liability and Pollution Liability relative to Insurance Bad Faith claims handling under 1980s policies with no pollution exclusions. The case was complicated by overlay of workers compensation coverage, contractual liability, and Reservations of Rights issues. Attorneys Brad Nes and Cullen Pick, Morgan, Lewis & Bockius, LLP (214) 466-4116. Standard Insulation v. Liberty Mutual Insurance Company, Civil Action No. 2022-CP-40-01241 In the Court of Common Pleas Fifth Judicial Circuit State of South Carolina, County of Richland.
Retained by counsel defending against a third-party landlord’s allegations of Agents Errors & Omissions and Insurance Bad Faith for ‘failure to procure’ additional insured status. Policyholder’s landlord alleged reliance on being a Certificate Holder on ACORD Certificates of Liability Insurance as grounds for being an additional insured under policyholder’s Commercial General Liability and Environmental Liability policies. Engagement required analysis of insurance requirements in the lease, scope of coverage for additional insureds and/or whether landlord ever requested being added as an additional insured. Landlord’s allegations also included Business Income Loss of Rents during site cleanup. HLT v. AssuredPartners, Case No. 1:18-cv-00045-RP, In The United States District Court For The Western District of Texas, Austin Division. Attorney Lisa Yerger, Macdonald Devin P.C. (214) 499-5116
Engaged by counsel defending a trucking company against allegations of improper insurance premium allocations charged to owner-operators. Case required market research relative to insurance coverages and premiums available to individual owner-operators vs. premiums allocated to owner-operators under a master truckers program. Engagement included analysis of owner-operator leases and customer Master Service Agreements insurance requirements for Commercial Auto, Commercial General Liability, Pollution Liability, Commercial Umbrella and Motor Truck Cargo. Attorneys Ed Chociey and Ron Leibman, Riker Danzig Scherer Hyland & Perretti LLP (973) 538-0800. Gassoway v. Benchmark; Case No.4: 15-cv-00488 In United States District Court, Southern District of Texas
Engaged by counsel defending allegations of bad faith for both Managing General Agent E&O and carrier claims handling practices. Dispute resulted from denial of ‘Well Out of Control’ and pollution claims from a ‘plugged & abandoned well’ fluids release. Case required analysis of an Energy Exploration & Development policy relative to first party property and third party pollution liability coverage. Denbury Resources v. Lloyds of London, et al; Cause No. 2012-10397 In The District Court of Harris County, Texas, 270th Judicial District. Attorneys Bart Hall and Jonathan Womack, Phelps Dunbar LLP (504) 566-1311.
Engaged by policyholder counsel as its Commercial General Liability and Pollution Liability expert relative to Insurance Bad Faith claims handling. Environmental contamination resulted from a pipeline valve failure, requiring site remediation. Litigation resulted following carrier’s denial of the pollution claim based on alleged late reporting. Arrow Pipeline v. National American Insurance Co., et al; Case No. CJ-2012-00313 In the District Court of Tulsa County, State of Oklahoma. Attorney Mark Blongewicz, Hall Estill Attorneys (918) 594-0400.
Consulting expert engaged by counsel for carrier and surplus lines agent pursuing recovery from retail agent. Case involved placement issues for a Food Borne Illness policy covering Trade Name Restoration, Loss of Business Income and Incident Response. Following claim denial for an E-coli outbreak, litigation resulted from retail agent’s “failure to disclose material terms” to restaurant franchisees enrolled under a Master policy. Lloyds and Professional Liability Insurance Services v. IMA of Kansas; Cause no. D-1-GN-10-004172 In District Court of Travis County, Texas, 353rd Judicial District. Attorney Christopher White, Lewis Brisbois Bisgaard & Smith LLP (214) 722-7100.
Engaged by carrier as Claims Made and Reported Professional Liability Insurance expert. Case involved late notice of claim and required expertise with Agents Errors & Omissions, Commercial General Liability (including Pollution Liability) and Commercial Umbrella. Environmental Analytics, Inc. v. Chartis Claims, Inc., et al. Cause No. 2010-42050; In The 234th J.D. Court Harris County, Texas. Attorneys Tim Kilgore and Dan Lynn, Jackson & Campbell, PC (202) 457-1632.
Retained by counsel for policyholder seeking coverage under a 1973 ISO Comprehensive General Liability form. Expert affidavit addressed issues involving Commercial General Liability and Products Liability Insurance coverage under Surplus Lines policies. Case also involved Pollution Liability coverage and Reliance Insurance Company liquidation proceedings (No. 269 MD 2001 In The Commonwealth Court of Pennsylvania). Reliance Insurance Co. v. Raybestos Products, United States District Court, Southern District of Indiana, Indianapolis Division, Cause No. IP 97-0027-C-Y/G. Attorney Brett Nelson, Plews Shadley Racher & Braun LLP, (317) 637-0700.