Old storage tanks can present significant and complex problems. Discovering a leaking underground storage tank can be nightmare for property owners, particularly in New Jersey. New Jersey requires disclosure of environmental contamination to potential buyers and has strict rules which often require costly methods for cleaning up contaminated property. Property owners should take a careful look at their current and historic insurance policies before paying out of pocket for cleanup costs. Policyholders pay premiums to insurance companies that are designed to cover a variety of risks. Policies purchased as many as 30 or 40 years ago may very well provide coverage for environmental damage that is discovered today.
In New Jersey, any insurance policy in effect while the tank is leaking – which can go on for thirty, forty or even more years – can be “triggered”.
If a policy is triggered then it must contribute to paying for a covered claim. Historically, most homeowners’ and general liability policies only provided coverage for occurrences during which oil leaks into the ground water and/or has impaired a neighbor’s property. In more recent years, property coverage at the property may – or may not – have changed.
Some policies now explicitly bar coverage for all damage arising from an underground storage tank, yet other policies now expressly include coverage for any and all damage arising from a leaking tank even if it doesn’t threaten a neighbor’s property. Accordingly, it is very important to locate every single policy that has covered the property. Once the policies have been gathered someone familiar with these issues should carefully review them. Each applicable insurance carrier should be put on notice. This is the first step toward ensuring that insurance companies pay their fair share.
Many policyholders have not kept copies of their older policies but may still obtain coverage. Insurance brokers will typically keep copies of policies for at least seven years and may have records going back much further. There are a multitude of other ways to find evidence of lost policies. For example, if a policyholder knows the name of the insurance company who insured the property in past years, a simple request to that insurer could lead to old policy records.
A real estate attorney recently mistakenly informed one of my clients that she had no insurance coverage because her current policy had an underground storage tank exclusion. However, once an attorney was retained, they requested a copy of the past broker records and were able to locate an older policy that provided coverage. They continued to press for more documents and discovered insurance company records showing that the client had been a loyal customer continuously since the early 1970’s. In the face of this evidence, the insurance carrier quickly agreed to pay almost all of the clean-up costs and the client was able to sell her home.
Experienced policyholder counsel can help property owners navigate through these issues and obtain coverage for leaking underground tanks. Over the course of my career, attorneys in my professional circles have helped secure over a billion dollars in judgments against insurance carriers. If you would like to discuss issues arising from underground storage tanks or any other insurance dispute questions you can contact me by email at chriswhalencpa@gmail.com and I will put you in touch with an attorney I fully trust.
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