Devoted Guidance From Resourceful Lawyers

Should my insurance help me with environmental cleanup?

On Behalf of | Nov 1, 2023 | Environmental Law

Any California business that has been responsible for one knows that environmental cleanups are very expensive.

  • There are the costs of the cleanup itself.
  • There are additional costs associated with testing and other steps that may be necessary to satisfy regulators that the cleanup was compliant with California’s laws.
  • In some cases, regulators may also impose fines and other costs.
  • An environmental issue may also expose a business to civil liability. This means the business will incur additional costs defending itself in court.
  • Despite defending itself, a business may be liable for pollution or a related environmental issue. They could have to pay multiple judgments, a class action or a high-dollar judgment.

In short, the financial fallout for even one environmental problem can cripple a business’s growth or even, in extreme cases, force it into bankruptcy.

Fortunately, insurance is available to cover many of these costs. Any business with any sort of potential environmental exposure should consider purchasing this specialized type of insurance coverage.

Businesses should presume that their basic commercial policies will not cover liability for environmental problems. In other words, the business will need to buy additional environmental coverage.

Owners and managers should read their insurance contracts carefully, understanding that they are binding legal documents. A business’s insurance agent has a responsibility to make sure that the business has the insurance it needs and thus should be a valuable source of information.

What if I have environmental coverage and the company won’t pay my claim?

Even with environmental coverage in place, insurance carriers may deny or challenge a business’s claim. This can leave a business facing the daunting prospect of paying for a major environmental incident itself.

Coverage disputes can happen even when everyone is acting in good faith.  In these situations, early negotiation may be a key to heading off a lawsuit and securing necessary insurance coverage or a legal defense to an environmental claim.

That said, sometimes the best option is engage in litigation with a business’s insurance carrier to compel the carrier to make good on its promises.