In many environmental cases, pre-pollution exclusion policies are invaluable assets that prove absolutely necessary in order to fund case resolution. This is especially where the insured-defendant is no longer in business or has few or no assets available to respond to the environmental cleanup requirement. But while the insurance coverage may be key to resolving the case, it is not uncommon for there to be an adversarial relationship between the policyholder and its insurance companies, as each is attempting to spend as little as possible of its own money in contribution to the settlement effort.
Needless to say this dynamic can create an impediment to reaching a settlement. What often happens is that policyholders opt to keep their insurers in the dark as much a possible, in an attempt to avoid disclosure of facts and circumstances that could provide the insurers with a basis to deny coverage. There is tension between facts that tend to establish coverage and which may also be harmful to the policyholder in the underlying environmental case.
Traditional litigation often fails to provide an effective way for insurance carriers and the value of their policies to effectively participate or contribute to resolution of the main environmental court proceeding. There may be ancillary lawsuits between various policyholders and their insurers but these are normally stayed pending resolution of liability issues in the environmental case. Even if the insurance coverage cases are not stayed there is no formal – and little informal – coordination between the various cases. [Read more…]