Packaged Environmental Insurance Claims Scenarios

An environmental consultant provided plans and specifications for the installation of monitoring wells at a contaminated facility. Contamination had seeped from the ground surface into a shallow aquifer. Following installation of monitoring wells, sampling showed evidence of contamination in both the shallow aquifer and in a lower lying aquifer. The facility owner filed an insurance claim against the consultant, alleging that well placement (location and depth) was responsible for the cross-contamination of the lower lying aquifer. The settlement amounted to $250,000.

A street/road contractor was subcontracted to pave a parking lot for a new commercial structure. At the end of the day, the tack coat was sprayed onto the sub-base prior to paving. During the evening, a major thunderstorm caused the tack coat to wash off and flow into a nearby stream. The general contractor was responsible for cleanup costs, which exceeded $200,000. To recoup these costs, the general contractor withheld the subcontractor’s payment. In turn, the subcontractor filed a claim with its insurance company to recover lost revenue. The insurance company denied reimbursement based on the absolute pollution exclusion under the general liability policy.

A residential contractor renovated the interior of a residential house built in the 1950s. The renovation involved paint removal from interior walls, window trim and door jambs. During the course of renovation, the contractor used a plastic barrier to seal the areas where he was working. The homeowners continued to occupy the house during renovations. Additionally, the wife was six months pregnant. Renovation was finished prior to the birth of the baby; however, upon birth, the child tested positive for blood lead poisoning. After investigating the source of the lead, the couple sued the contractor for bodily injury as well as potential loss of future wage potential (due to a possible decreased IQ level for the baby) in the amount of $500,000.

These claims examples have been provided to us by our insurance companies over the years. These represent actual environmental claims they have seen. While the coverages we offer are designed to address these general issues, we make no guarantee or warranty that any individual policy we offer will respond to all issues as described herein. Please refer to the actual policy wording in each offered form to determine coverage applicability and acceptability.