August 30, 2018

Environmental Insurance Pitfalls

Chris Rycewicz and David Bechtold

Environmental attorneys have long known the importance of pre-absolute pollution exclusion insurance policies as a source of funding for cleaning up historically contaminated properties. In the past two decades insurance law relating to long-tail environmental liabilities (i.e., those covered by multiple general liability policies) has become relatively well established in most jurisdictions. For example, attorneys in our practice region of the Pacific Northwest can, with relatively high confidence, inform clients that sudden and accidental pollution exclusions in their commercial general liability (CGL) policies will not bar coverage for unintended and unexpected releases, and that information requests from enforcement agencies such as the U.S. Environmental Protection Agency will trigger a duty to defend. See Ash Grove Cement Co. v. Liberty Mut. Ins. Co., 649 F. App’x 585 (9th Cir. 2016); St. Paul Fire & Marine Ins. Co. v. McCormick & Baxter Creosoting Co., 324 Or. 184 (1996). Additionally, the Oregon and Washington legislatures have codified rules addressing issues such as lost policies, cost allocations, and claims handling practices. ORS § 465.480; WAC § 284-30-910. While many of the more routine coverage issues have become somewhat settled, we routinely hear of cases where parties working to clean up properties fall into insurance pitfalls and end up bearing a significant financial burden although they have what we consider relatively good coverage. In this article, we detail several issues we have seen arise in the Pacific Northwest and suggest ideas on how to avoid them.

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