Insurance Coverage And Litigation Strategy For Cleanup Costs - Chapter 14 - Managing Environmental Liability

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Managing Environmental Liability - Business Transactions and Brownfield Redevelopment - Looseleaf

Managing Environmental Liability - Business Transactions and Brownfield Redevelopment - Electronic

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14
INSURANCE COVERAGE AND
LITIGATION STRATEGY
FOR CLEANUP COSTS
§ 14.01 Introduction
With corporate America facing an estimated $100 billion cleanup bill to detoxify
the nation’s hazardous waste sites, hundreds of companies have filed claims
under their comprehensive general liability (CGL) insurance policies seeking to
shift financial responsibility to their CGL insurance carriers for the cleanups and
for the costs of defending recovery actions brought by environmental authorities or
third parties.
The insurance industry has vigorously opposed these claims. As a result, a flurry
of multi-million dollar suits have been filed against CGL carriers. These suits often
name over a hundred defendants. Because the state and federal courts are divided
on the issue of CGL carrier liability, there has been a classic race to the courthouse
with insureds and their carriers scrambling to file coverage suits in the most
favorable forums.
A CGL insurance policy typically imposes two fundamental obligations on the
insurance carrier: a duty to defend the insured and a separate and distinct duty to
indemnify the insured if a settlement is reached or a judgment is entered.
§ 14.02 Duty to Defend
CGL policies impose upon the insurers a duty to defend when there is any suit
for damages for bodily injury or property damage. The standard CGL policy
provides that ‘‘[The Insurer] shall have the right and duty to defend any suit against
the insured seeking damages on account of... bodily injury or property damage even
if any of the allegations of the suit are groundless, false or fraudulent.’’ This duty is
much broader than the duty to indemnify and can be one of the most important
contractual rights granted to the policyholder because the high costs of defending
environmental litigation often exceed the amount of the settlement or judgment

Chapter 14: Insurance Coverage for Cleanup Costs

14.01 Introduction
14.02 Duty to Defend
14.03 Duty to Indemnify
14.03A Occurrence
14.03B Triggers of Coverage
14.03C Pollution Exclusion
14.04 Notice
14.05 Voluntary Payments
14.06 Property Damage
14.07 Owned Property Exclusion
14.08 Other Forms of Insurance Policies
14.08A — Environmental Impairment Policies
14.08B — First Person Property Policies
14.09 Guidance and Strategy for Policyholders
14.10 Insurance Products for Brownfields and Other Site Remediation
14.11 Negotiating Environmental Insurance Policies
14.12 Insurance Requirements of Rating Agencies

    A. Fitch IBCA
    B. Duffs & Phelps Credit Rating C (‘‘DCR’’)

14.13 The 2001 CERCLA Amendments and Environmental Insurance

Lawrence P. Schnapf is Principal of Schnapf LLC. He has 25 years of national environmental experience with Fortune 500 corporations and a number of major New York-based law firms. Mr. Schnapf primarily concentrates on environmental issues associated with corporate, real estate and brownfield transactions, commercial lending, distressed debt, bankruptcy and workouts. He has extensive experience with brownfield redevelopment and financing, negotiating environmental insurance policies for business and real estate transactions, performing environmental due diligence for complex business transactions.

He has also written numerous articles on environmental law, is a contributing author for several chapters of "Brownfield Practice and Law: The Cleanup and Redevelopment of Contaminated Properties" published by Matthew Bender. He was also a contributing author for "The Law Of Environmental Justice" published by the American Bar Association and the Matthew Bender "Environmental Law Practice Guide".

Mr. Schnapf is the co-chair of the New York State Bar Association's Hazardous Site Remediation Committee, co-chair of the NYSBA Brownfield Task Force and a board member of the Board of the NYC Partnership of Brownfield Practitioners. He is also the chair of the Brownfield Committee Force of the Environmental Business Association of New York.

He is Chair of the ABA Section of Business Law Committee on Environmental, Energy and Natural Resources Law. He is a vice chair of the Environmental Transactions, Audits and Brownfield Committee: and Special Committee on Disclosure of the ABA's Section of Environment, Energy and Resources. He is also a member of the board of BNA's Environmental Due Diligence Guide.

Mr. Schnapf is also a member of the ASTM 1527 Task Group, Phase II Legal Work Group, Co-Chair of the legal sub-committee for the ASTM Vapor Intrusion Task Group, a member of the ASTM Appropriate Care/Continuing Obligations Task Group and Building Energy Performance Disclosure Task Group.

Mr. Schnapf is an adjunct professor of environmental law at New York Law School where he teaches "Environmental Issues in Business Transactions" and "Environmental Law and Policy". He is also on the faculty of the Center for Christian Studies at Fifth Avenue Presbyterian Church where he teaches "The Bible and the Environment."

He is listed in the International Who's Who of Business Lawyers 2008 and 2009, the 2009 Madison's Who's Who of Executives and Professionals, and The International Who's Who of Environmental Lawyers 2008 and 2009, and Chambers USA 2009 Client Guide of America's Leading Lawyers for Business.