Tips for Maximizing Your Insurance Recovery for Contaminated Sites

Transcription

1 Tips for Maximizing Your Insurance Recovery for Contaminated Sites An Overview of Key Issues and Steps You Can Take Megan Brillault Nicole Weinstein July 10, 2018

2 Agenda Environmental coverage overview Risk management considerations Possible scenarios Takeaways 2

3 Know Your Coverage for Environmental Risks Historic CGL Pollution Legal Liability Directors & Officers (D&O) Coverage for bodily injury, property damage, and legal defense costs Pre-1970 s are the most valuable Sudden & Accidental pollution exclusion: 1970 s Absolute pollution exclusion: mid s First and third party coverages, e.g.: On-site cleanup of unknown conditions and for reopener of known Off-site cleanup NRDs Transportation spills Non-owned disposal sites Illicit abandonment Civil fines and penalties (but not criminal) Coverage for individual D s & O s for breach of official duties (including defense) Coverage for company s indemnity obligations to D s & O s Coverage for company s own liability for certain claims (e.g., securities) Pollution exclusions generally not included for individual D s & O s 3

4 Hypothetical Scenarios How to Make the Most of Your Environmental Insurance

5 Successor/Contamination: The Scenario Ø Company has acquired another entity that historically sent its waste to a site that s now being cleaned up Ø Company has been brought into a CERCLA allocation suit by the primary PRP, and/or Ø Company has been sued by residential neighbors alleging bodily injury from exposure and property damage from contamination. 5

6 Current Contamination: The Scenario Ø One of Company s manufacturing facilities discovers onsite contamination Ø Possible impact on groundwater Ø Company is in negotiations with the regulators, and is considering undertaking the cleanup 6

7 No Air Emissions: The Scenario Ø Company has been accused of knowingly manipulating equipment to provide more favorable air release readings than justified Ø Company is navigating negotiations with EPA and preparing for the possibility of criminal allegations age 7

8 Storm Damage: The Scenario Ø The company s property has been badly damaged in a hurricane Ø Also lost significant income attributable to the damage to their operations at the property Ø To add to the injury, some chemicals were released by the high winds 8

9 Client Merger / Acquisition / Brownfield: The Scenario Ø Company is merging with /acquiring another company Ø Company is conducting due diligence process for environmental issues Ø A serious environmental problem is identified with the target company 9

10 Risk Management Considerations Risk Management (RM) The relationship and procedures between risk management (RM) and legal department (LD) are different for every company. Coordination between RM and LD is critical. Legal Department (LD) Timing of notice Essential to understand the insurance policies and key distinctions 10

11 Key Takeaways ü Know your policies - You may have more insurance than you believe. ü ü Check your specialty environmental insurance (PLL). Historic insurance is extremely valuable for environmental liabilities and an acquired company may have its own. ü For want of a nail, the shoe was lost. Insurance often lost because of failure to follow policy terms; e.g., timely notice, cooperation, consent to settlement. ü Don t take no for an answer. 11

12 Insurance Cheat Sheet When the company encounters (a) litigation, (b) a matter that could turn into litigation/arbitration/etc., (c) a loss, or (d) a transaction with a contamination/potential contamination element, the following steps are important: Step 1: Step 2: Step 3: Ask whether coverage is available. Identify all potential sources of coverage. Find and review the policies to evaluate coverage and help decide which insurer(s) to notify. Step 4: Step 5: Give notice promptly. Respond to the insurer. Step 6: Keep the insurer informed (carefully) / seek consent when required. 12

13 Questions? Brillault, Megan Shareholder, New York, Insurance (212) Weinstein, Nicole Associate, New York, Insurance (212) Megan represents clients in complex civil and criminal environmental and toxic tort litigation, as well as insurance recovery. Nicole focuses her practice on identifying and negotiating avenues of insurance recovery, as well as defending contamination-related litigation. 13

14 Thank You from Our Practice Group San Francisco New York Austin Ken Finney John Kazanjian Megan Brillault Edward Grauman Jacob Duginski Rusty Pomeroy Nicole Weinstein 14