II.         Help from the insurance of prior owners

A.        Two chief kinds of insurance

1.            Third party liability - CGL policies 

2.            First party property - property insurance 

B.         Liability coverage –  new owners or agency may sue for cleanup – l iabiltiy policies should respond 

1.            Most CGL policies are “occurrence” policies 

(a)            cover liability for property damage in policy period even if claim is years later 

(b)            obligation not reduced by insolvency of policyholder or fact policyholder is no longer in business 

2.            First step – find the policies, or evidence of policy terms 

(a)            sources 

(1)            client 

(2)            insurer

(i)            usually claim do not retain 

(ii)            potential bad faith claim 

(3)            accountant 

(4)            agent 

(5)            lawyer on prior claims 

(6)            lender 

(7)            customer or co-venturer 

(8)            past board members  

(b)            look for any evidence of coverage 

(1)            secondary evidence – schedules, invoices, accounting or tax records, premium checks, prior claim documents 

(2)            check insurance commissioner 

(c)            insurance archaeologists 

(d)            look for several layers of coverage 

3.            Second step – Review the policies and make the claim 

(a)            talk to client about representations made to it and client’s expectations of coverage 

(b)            review all parts of policy 

(1)            endorsements may affect coverage 

(c)            sue the prior owner or operator – promptly 

(1)            most insurers will not defend claims 

(2)            watch statutes of limitations 

(3)            craft complaint so it will fit coverage

(i)            avoid if can allegations of intentional or expected releases 

(ii)            may push outside coverage as a result of “pollution exclusions”  

(4)            plead in the alternative 

(5)            if agency or another party brings claim against you, give notice to carrier and demand defense and indemnity 

(i)            two obligations of CGL policy – defense and indemnity 

(ii)            notice should be given to all carriers from date site operated 

(6)            notice should give enough information and request defense and indemnity from carrier -- object is to force it to make investigation and response 

4.            Third step - hang tough 

(a)            insurer will deny coverage or reserve rights to deny 

(1)            will not pay at first request, even if (as in Indiana) law is crystal clear on obligation to pay 

(2)            will request lots of information regarding site 

(i)            burden may fall to claimant if prior owner is insolvent or out of business 

(3)            duty to defend on any colorable claim 

(i)            duty is broader than duty to indemnify 

5.            Fourth step – Work with the insurer 

(a)            furnish information in a timely manner 

(b)            make a written record of all you do  – may be useful later

(c)            be as cost-effective as possible 

(1)            provide uniform status updates as opposed to individual reports 

(2)            ask excess carriers to get information from primary 

(3)            if multiple sites involved, ask carrier to designate one representative 

(d)            be persistent in reminding carrier of its obligations 

(e)            use creativity in seeking resolution before suit, but do not hold your breath 

6.            Fifth step – Sue 

(a)            insurers are professional litigation machines 

(1)            likely will not take you seriously or give close to top dollar unless you sue and show you are willing to pursue case to trial 

(b)            seek all the relief you can 

(1)            may have bad faith claim 

(2)            where applicable, keep pressing for defense costs 

(c)            extensive document discovery may be necessary 

(1)            how has insurer treated like claims 

(2)            drafting history 

(i)            insurance commissioner submission 

(ii)            other counsel pursuing claims 

(d)            insurer will raise lots of defenses – do not give up! 

(1)            look for summary judgment motions to narrow the issues, increase pressure to settle

7.            Sixth step – pursue settlement options 

(a)            lots of room for creativity 

(1)            since many carriers may be involved, no one likely will have to pay 100% of claim 

(2)            policy or environmental “buyouts” may attract carriers since will put a ceiling on exposure 

(3)            coverage actions are expensive and risky 

(4)            “layered” settlements may be helpful 

(5)            only limit is imagination 

8.            All these points apply whether you are claimant or one claiming against policyholder 

(a)            if claiming against policyholder, watch carefully and assist

III.       Do not forget first party coverage –

A.        Same range of issues, much overlap