Two decisions involving clean-up of environmental conditions and the use of environmental insurance demonstrate many of the pros, cons and pitfalls potential policyholders need to consider.
The first decision comes from Texas and involved the duty to defend and the insurance policy definition of “clean-up costs.” The duty to defend when someone sues you is one of the primary benefits of liability insurance. The duty is triggered almost universally based on an “any-possibility-of-coverage” standard when one compares the complaint(s) or threatened legal action to the language of the insurance policy. In this case, the plain language of the policy was held to address the insurance company’s affirmative responsibility to indemnify against off-site clean-up costs caused by “pollution conditions” on or under the insured property. It was not disputed that the underlying lawsuits asked the court to create a schedule for complying with certain environmental laws that drove the clean-up issues.