Howard Davis P.C.

Case Studies

Insurance Cost Recovery Case Study

We assist our clients to review their files, sometimes long forgotten in a dusty basement or attic somewhere, as well as the files of their insurance agents and other parties, in order to find potentially applicable historic insurance. For example, on behalf of one client that owned a former facility that stored hazardous substance, we reviewed files maintained over a 40-year period. These efforts led to successful negotiations with insurance providers, resulting in a substantial cost recovery. In another case, we retained a forensic insurance expert to review files at Lloyds of London, which resulted in our client locating coverage for the contamination of his site.

We also scrupulously investigate the insurance coverage of our adversaries as an avenue of cost-recovery.

Our painstaking insurance recovery efforts have significantly reduced out-of-pocket expenses for many clients. For example, on behalf of one industrial client that historically used hazardous chemicals in its processes, we successfully negotiated an approximately 97% insurance coverage under its general liability policies. This means that 97% of the environmental costs of the remediation of the contamination at the client’s property were paid for by the insurance companies.

In the homeowner context, we frequently are called upon to assist clients in pursuing insurance coverage for contamination from leaking underground storage tanks used to store heating oil. In certain instances, it is possible to secure 100% coverage under the homeowner liability policy and facilitate remediation. We have done this even when the tank insurance provider previously had walked off the job and refused to provide coverage.

On behalf of another residential client where the estimated cost to cleanup exceeded the combined value of the home and property, we successfully persuaded the insurance provider to pay the client the estimated value of the home and land in addition to paying to remediate the site to obtain a No Further Action (NFA) Letter from the NJDEP.

Although the policy language is often the same or similar in policies issued nationwide, courts in different states interpret it differently. Unlike many other states, New Jersey courts have held that certain CGL and homeowner policies do cover claims associated with contaminated soils and groundwater. Specifically, New Jersey courts have held that when environmental contamination occurred prior to about 1985, a period when an “absolute pollution exclusion” typically was inserted into standard insurance policies, these policies nevertheless may cover the costs to clean up contamination.

A careful review of the client’s policies is always crucial. Despite the standard forms, some policies did not include pollution exclusions until the 1990s. And residential homeowner policies typically provide coverage into the 2000’s. Even now, certain policies may not exclude pollution. Our familiarity with the various policies that have been issued by the insurance industry over time helps us provide efficient assistance when it is necessary to parse through potentially applicable policies.

We have successfully assisted clients in identifying in recovery of these historic policies and have helped obtain coverage to pay for and facilitate the investigation and remediation of environmental contamination. Over the past year alone we have secured over 2.5 million dollars for our clients from insurance companies for environmental investigation and remediation.

Unfortunately, many clients have either thrown out or misplaced their old insurance policies. Locating those policies, or at least some evidence of their existence, can necessitate an extensive document archeology.