Financing MGP clean-up through recovery on historic liability insurance policies

Eisenstein, Laurence J.; Malanchuk, John L.

Abstract
Lack of adequate funds for MGP and other related remediation obligations often influences the remedy selected and the degree of clean-up performed. Just emerging in Europe, and at times overlooked in the United States, is the use of claims on insurance coverage dating back to the 1980s and earlier as a source of remediation funding. This paper describes the theory of insurance recovery, and how it is applied to MGP sites to provide millions of dollars in MGP remediation funding, and to facilitate reuse of MGP property where adequate funding for redevelopment otherwise is unavailable. Information is provided to identify the key data needed to evaluate the potential for insurance recovery and to start to locate insurance policy evidence. In addition, there is discussion of unique legal issues in presenting an insurance claim in Europe, including the impact of the Third Parties (Rights Against Insurers) Act. Using a case study, this paper provides a brief overview of how the insurance recovery process works in practice, from inception to completion, and how the insurance process interacts with ongoing environmental remediation efforts. Strategies for successful negotiation of an MGP insurance recovery claim are presented, with advice on how to best support and facilitate this process.

Key words: economics; finance; insurance; negotiation

Land Contamination & Reclamation, 14 (2), 357-360 (2006) 

DOI 10.2462/09670513.739

Updated: 29-Dec-2008