The U.S. Justice Department announced on May 5, 2022, a new comprehensive federal environmental justice enforcement strategy. In short, whether as a result of state enforcement, federal enforcement or third-party lawsuit, American companies will need to continuously consider their exposure to environmental liabilities for the foreseeable future. (Credit: ADragan/Shutterstock) The U.S. Justice Department announced on May 5, 2022, a new comprehensive federal environmental justice enforcement strategy. In short, whether as a result of state enforcement, federal enforcement or third-party lawsuit, American companies will need to continuously consider their exposure to environmental liabilities for the foreseeable future. (Credit: ADragan/Shutterstock)

At some point in time, every commercial insurance agent or broker will face a situation where their client has a potential liability for claims that are excluded from coverage or where available coverage is insufficient. In such situations, breaking the bad news regarding lack of coverage can lead to disappointment and strained client relationships. Nevertheless, with a little ingenuity and gumshoe detective work, there often remain opportunities to find responsive coverage even for significant claims.

Long-tail pollution liabilities are some of the most concerning and difficult to cover risks for companies operating in the United States. In addition to the many state-driven initiatives to address long-standing pollution issues such as those in New Jersey and California, the U.S. Justice Department recently announced on May 5, 2022, a new comprehensive federal environmental justice enforcement strategy. In short, whether as a result of state enforcement, federal enforcement or third-party lawsuit, American companies will need to continuously consider their exposure to environmental liabilities for the foreseeable future. If your client is facing an environmental claim without pollution coverage (or if they are seeking additional coverage beyond that provided on a current pollution policy), here are five questions you should ask before sending them away without coverage and disappointed.

1. Does the pollution claim relate to activities that occurred prior to 1986?

You should operate under the assumption that general liability policies issued prior to 1986 would have made available coverage for at least some pollution incidents. In the history of insurance coverage for pollution liabilities, 1986 was a critical year. As the risks associated with pollution liabilities in the United States continued to mount, the ISO promulgated a new general liability form in 1986. The new form was named the “commercial” general liability form rather than the earlier name of “comprehensive” general liability. Critically, the new commercial general liability form incorporated an absolute pollution exclusion. As a result, unless your client purchased standalone pollution coverage, it is unlikely that your client would have general liability coverage available for alleged post-1986 pollution activities.

Want to continue reading?
Become a Free
PropertyCasualty360 Digital Reader.

INCLUDED IN A DIGITAL MEMBERSHIP:

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.

Already have an account?

 

PropertyCasualty360

Join PropertyCasualty360

Don’t miss crucial news and insights you need to make informed decisions for your P&C insurance business. Join PropertyCasualty360.com now!

  • Unlimited access to PropertyCasualty360.com - your roadmap to thriving in a disrupted environment
  • Access to other award-winning ALM websites including BenefitsPRO.com, ThinkAdvisor.com and Law.com
  • Exclusive discounts on PropertyCasualty360, National Underwriter, Claims and ALM events

Already have an account? Sign In Now
Join PropertyCasualty360

Copyright © 2022 ALM Global, LLC. All Rights Reserved.