about Risk: Insurance Case Studies

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Case Studies and Applicable Insurance Products

Case Study Types:

Commercial & Industrial Facility

Rail Yard

Type: Commercial & Industrial Facility

Product: Clean-up Cost Cap (CCC)
Pollution Legal Liability Select® (PLL Select®)

Scenario: For nearly a hundred years, an 80-acre property operated as a rail yard with many different owners and varying activities. Over the years, maintenance operations and building were expanded and the site was once owned and used by a steel company that used it for steel fabrication.

Recently, ownership returned to a railroad company. In purchasing the site, the new owner inherited a railroad legacy that included years of pollution. Many factors - including multiple owners of the property as well as long years of activity before regulation - have complicated the contamination assessment process and obscured potential clean-up costs.

However, initial inspections revealed that the site had significant contamination from old storage tanks, a battery waste pile, and an old refueling station among other potential pollutants. The new site owner faces a difficult assessment process with inevitability of expensive on-site cleanup.

The issue is further complicated because the site is located within 4 miles of several wells that supply drinking water to a large suburban community and the railroad company faces the potential of offsite cleanup costs.

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Rail Yard - Maintenance

Type: Commercial & Industrial Facility

Product: Clean-up Cost Cap (CCC)
Pollution Legal Liability Select® (PLL Select®)


Scenario: Residents of several counties began complaining of a bad taste in their drinking water. Since the local government failed to act, the residents had their water tested in private laboratories and found unacceptable levels of chemicals such as Trichloroethylene and PCBs. Armed with this information, the residents demanded the government pinpoint the source of the contamination and eliminate it.

Assessments by the Environmental Protection Agency determined that the source of the pollution was a 600+ acre site owned by a local railroad company. Apparently, years of locomotive maintenance operations had polluted the soil and groundwater. Tests revealed that hundreds of area residents were drinking the tainted water.

As a result the railroad company was forced to construct and pay for state-of-the-art water lines, pay each homeowner's cost of hookup and water bill for one year, and pay to cleanup the polluted site. The railroad paid $8 million for more than 1000 homes to receive water system benefits. The company paid an additional $25 million in cleanup costs.

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Real Estate Redevelopment

Type: Commercial & Industrial Facility

Product: Pollution Legal Liability Select® (PLL Select®)
Pollution Legal Liability Real EstateSM (PLL Real EstateSM)

Scenario: A company submitted a proposal for a $250,000 purchase and $2.5 million redevelopment of a city-owned site. The plan included a state-of-the-art facility that would create more than 100 jobs. Formerly a Brownfield's property, the site had recently been designated "clean" by the EPA.

The clean up (which was partially funded by a $30,000 EPA Brownfield's Assessment Grant) was integral to a citywide plan for revitalization. After lengthy negotiations over a 12-month period, the company and city sealed the deal and construction began.
Shortly after breaking ground, a bulldozer uncovered several barrels of chemicals, probably buried during a past operation. While removing the barrels, one of them spilled. The chemicals flowed into an unprotected drainage pipe that dumped into a nearby river. A few days later, neighbors called local authorities and complained about unpleasant odors.

Further investigation linked the odors to the chemical spill. Ten households alleged bodily injury and property damage and sued the company. The court ordered the company to clean up the river. Clean up and claim settlement cost the company $450,000.

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Rented Industrial Facility

Type: Commercial & Industrial Facility

Product: Pollution Legal Liability Select® (PLL Select®)
Pollution Legal Liability Real EstateSM (PLL Real EstateSM)

Scenario: 15,000 gallons of fuel oil were released from an above ground storage tank at a manufacturing facility. Subsequently, the pollutant migrated to an off-site drainage trench resulting in additional soil and groundwater contamination.Though the discharge was allegedly the result of vandalism and the manufacturing company was a tenant currently leasing and operating on the property, the developer/owner was found responsible for damages.

The state required the developer to handle the clean-up of all contaminants, both on- and off-site, and conduct future monitoring at the site. This included the removal of fuel oil from all surrounding vegetation, soil excavation, sampling measures and ultimate disposal of the oil.

Solution: Environmental experts managed all phases of the clean-up taking measure to ensure a "No Further Action" status from the state. Estimated damages total $1.5 million.

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Solid Waste Landfill

Type: Commercial & Industrial Facility

Product: Pollution Legal Liability Select® (PLL Select®)

Scenario: A municipal landfill, which has been in operation for about ten years is located three miles from a residential development with 50 homes. Recently, residents in the development filed a suit against the municipality alleging bodily injury and property damage due to contamination emanating from the landfill. Preliminary investigation by the state EPA confirmed soil and groundwater contamination from feces and volatile organic compounds.


Further investigation traced the contamination to the landfill and discovered a disintegrating and leaking clay liner, which was installed when the landfill first opened. In addition to a high quantity of rat and bird carcasses and feces, there were high amounts of dissolved and suspended solids leaking into the soil and groundwater from the landfill.

Property owners were strongly advised to use bottled water until an alternative water supply can be found. The municipality immediately excavated and capped the landfill, which is being monitored and assessed for future cleanup needs. Municipality officials hope to install a proper liner and leachate system and reactive the solid waste landfill at some further date. Until then, a contract to haul all non-hazardous household waste from the municipality to a private landfill has been finalized.

A settlement was reached between the property owners and the municipality to cover off-site bodily injury and property damage claims. To date, settlement and cleanup costs incurred by the municipality total $270,000.

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Pollution Liability

A Partnership Assisted with Insurance

Type: Pollution Liability

Product: Clean-up Cost Cap (CCC)
Pollution Legal Liability Select® (PLL Select®)

Scenario: A city was given a 69-acre abandoned industrial complex located just outside of its downtown area. The city had a long industrial past that included among others, automotive and drop forge-manufacturing facilities. With contamination on the site from over a century of metalworking, the property sat vacant for nearly five years as potential developers shied away from the property's environmental liabilities.

Solution: In partnership with the site's former owners and the environmental contractor, the municipality secured an environmental insurance policy through AIG Environmental that covered expected cleanup costs and potential clean-up cost overruns. With this in place, the municipality established a Tax Increment Financing (TIF) district and applied for additional funding and incentives through state and federal programs such as the Brownfield's Cleanup Revolving Loan Fund.

The redevelopment is expected to pay for itself over a 23-year period, lessening the financial burden on taxpayers. In the first phase of the remediation, a portion of the once contaminated property was transformed into waterfront residential housing, parks, trails, and a public museum with green spaces designated as public gathering space. Developers are now lining up to participate in future development phases.

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Base Closure And Redevelopment XL

Type: Pollution Liability

Product: Pollution and Remediation Legal Liability (PARLL)

Scenario: A closed Air Force Base with several areas of contamination was being leased to various tenants. A manufacturer was concerned that it might be held responsible for the contamination under its location if their current activities and operations exacerbated the known contamination.

XL Environmental provided a Pollution and Remediation Legal Liability (PARLL) policy at $10 million limits of liability. Risk Control assisted the manufacturer by providing recommendations for reducing their potential for liability for the overall contamination problem.

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Covering Financial Conglomerate XL

Type: Pollution Liability

Product: Professional and Pollution Liability – General Contractors (PPL-GC)

Scenario: A financial conglomerate that operated a bank, Mortgage Company and a small REIT was concerned about its quickly developing portfolio and the large environmental exposure within its properties and mortgage loans. The company called on XL Environmental to develop a risk management plan to address their needs as both a lender and a property owner.

Programs were developed for the bank and mortgage operation as well as the real estate investment trust. XL Environmental’s Real Estate Lender’s Policy (RELP) was used in both cases since both entities invested in property and also loan money through commercial mortgages. Additionally, as the real estate investment trust began to acquire properties in Europe, a separate policy was added to cover locations in Europe. Beyond the insurance coverage itself, risk control services were provided by XL Environmental to help in acquiring assets as well as in developing the expertise of the client’s internal staff to better address environmental needs in the investment portfolio.

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Lenders (Coverage for Real Estate and Loan Portfolio) XL

Type: Pollution Liability

Product: Pollution and Remediation Legal Liability (PARLL)

Scenario: A major life insurance company wanted to protect its real estate investment portfolio, which exceeded 10 million square feet of buildings, from environmental exposures. The portfolio was submitted to XL Environmental for underwriting purposes, and XL Environmental Underwriting recommended that the client also consider covering environmental exposures in the client’s loan portfolio. A blanket Pollution and Remediation Legal Liability (PARLL) policy was provided by XL Environmental covering the client’s real estate portfolio and loan portfolio including all future investments.

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Lenders (Training for Trust Officers) XL

Type: Pollution Liability

Product: Pollution and Remediation Legal Liability (PARLL)

Scenario: A bank purchased an XL Environmental Underwriting Pollution and Remediation Legal Liability (PARLL) policy to protect the bank’s trust department for their fiduciary responsibility to their customers, the grantors of the trusts. As a value-added service, Risk Control provided three separate training sessions for all of the bank’s trust officers to assist them in identifying and controlling potential environmental liabilities.

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Loan Requirements (Bank Requires Coverage; Texas) XL

Type: Pollution Liability

Product: Pollution and Remediation Legal Liability (PARLL)

Scenario: As part of a loan requirement, a bank asked a new warehouse owner to provide a $2 million limit of liability for a 12-acre parcel of land, formerly used for manufacturing of electronic components.

XL Environmental Underwriting was able to provide a quotation within a 24-hour period due to the time constraints on the property closing. Pollution and Remediation Legal Liability (PARLL) was purchased at $5 million limits of liability for three years with a $25,000 self-insured retention, and the lender was named as an additional insured party.

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Manufacturer XL

Type: Pollution Liability

Product: Pollution and Remediation Legal Liability (PARLL)

Scenario: A manufacturer began expansion of the production line area at their facility. During excavation, oily soils with a "petroleum" odor were discovered.  An XL environmental consultant visited the site to determine the extent of contamination and to retain a qualified remediation contractor for the cleanup. Further investigation uncovered an old, undocumented sludge-drying pit, which the previous owner used back in the 1940s.

The manufacturer’s Pollution and Remediation Legal Liability (PARLL) policy responded to cover the cost of removing and remediating the soils. The cleanup costs exceeded $200,000. XL’s fast response ensured minimal disruption of the manufacturer’s operations and kept the expansion project on schedule. The manufacturer was able to meet customers’ contracts on time.

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Petroleum DistributorXL

Type: Pollution Liability

Product: Pollution and Remediation Legal Liability (PARLL)

Scenario: A petroleum distributor insured by XL Environmental was placed on notice of a release from a gas station operated by one of its tenants. The release was discovered during excavation activities at a site next door. The distributor faced a costly investigation and cleanup, and increased scrutiny from the environmental authorities.

XL Environmental Claims assisted the insured in retaining a qualified environmental consultant who prepared an appropriate investigation plan acceptable to the regulators. The investigation revealed that the contamination, although extensive, did not pose a risk to nearby receptors. Therefore a less expensive soil cleanup and risk-based response, which allowed some contamination to remain because it did not pose a risk to others, were permitted by the regulators.

The petroleum distributor’s Pollution and Remediation Legal Liability (PARLL) policy will respond to the costs of the investigation and cleanup, which amounted to $175,000.

XL Environmental Claims’ experience in managing environmental claims enabled it to choose an appropriate environmental consultant who was trusted by the regulators, and who did not try to take advantage of the situation and recommend an extensive cleanup. The resulting quick response to the claim avoided unnecessary cleanup costs as well as fines and penalties.

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Property OwnerXL

Type: Pollution Liability

Product: Pollution and Remediation Legal Liability (PARLL)

Scenario: XL Environmental insured a real estate firm that owned a large warehouse where a tenant stored a variety of chemicals. A Phase I assessment performed on a parcel of vacant land neighboring the warehouse showed chemical contaminants whose origin was traced to the warehouse. Cracks in the reinforced concrete floor of the warehouse had allowed leaking chemicals to escape, causing extensive soil and groundwater contamination of the neighboring property. The owner of the vacant land filed suit to recover the costs to remediate his property, as well as money lost when a pending sale of the property was cancel as a result of the contamination.

Claims counsel and an environmental consultant from XL Environmental flew to the site of the incident to ensure a thorough investigation of the claim, including a review of invoices to ensure the remediation work was performed at a reasonable price. The invoice review turned up several excessive charges that XL was able to discharge. Working proactively with the claimant, XL negotiated a settlement that satisfied the claimant as well as the insured.  XL’s Risk Control staff was even able to assist the client in developing and implementing procedures to minimize their risks of similar incidents in the future.  The property owner’s Pollution and Remediation Legal Liability (PARLL) policy responded to cover the majority of the costs arising from the cleanup of both his and the claimant’s properties.

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Property Owner/ManagerXL

Type: Pollution Liability

Product: Pollution and Remediation Legal Liability (PARLL)

Scenario: The tenant of a property owner/manager insured by XL Environmental complained of dust conditions in their work area. Sampling revealed that the dust was laden with heavy metals (arsenic, cadmium, chromium and lead). The contamination appeared to be the result of the prior owner’s operation at the site. Even though the prior owner had indemnified the current owner, they were slow to respond to requests for cleanup of the site.

To reduce the insured’s liability/damages and to return the tenant to its operations, XL retained an environmental consultant/contractor to clean up the dust. The insured’s Pollution and Remediation Legal Liability (PARLL) policy afforded coverage for investigation and remediation of the dust conditions. XL’s in-house attorneys assisted the owner in pursuing the prior owner to ensure they honored the obligation contained within their environmental indemnity.

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Property Transfer XL

Type: Pollution Liability

Product: Pollution and Remediation Legal Liability (PARLL)

Scenario: A gas utility provider purchased property to expand operations. A Phase I Assessment failed to discover any issues. Upon excavating soils for a new building, petroleum contaminated soils were unearthed. Further investigation uncovered an old, undocumented storage tank dating back to the 1950s.

XL sent an environmental engineer to the site to oversee cleanup activities and an XL claims counsel worked with the insured to recover cleanup costs from the former property owner.  The insured’s a Pollution and Remediation Legal Liability (PARLL) policy responded to the cover the cost of soil remediation, which exceeded $220,000. XL’s swift response and expertise in overseeing cleanup activities minimized delays to the insured’s expansion project and the associated extra expenses.

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Real Estate DeveloperXL

Type: Pollution Liability

Product: Pollution and Remediation Legal Liability (PARLL)

Scenario: A real estate developer insured by XL Environmental was planning to construct a luxury hotel with an underground parking garage on the site of a former apartment building. During construction, soil contamination was discovered in one area of the site. Initial investigation revealed the presence of petroleum. A brick cistern was unearthed, which appeared to be the source of contamination. No historical documentation or site plans reviewed during a Phase I Site Assessment of the property revealed the presence of the cistern.

The remediation would entail excavation and off-site disposal of the contaminated soil. Disposal fees, which were estimated at $60,000 to $80,000, were in excess of the original scope of work. During excavation of the contaminated soil, it became evident that groundwater likely would be impacted as well, which would require the installation of groundwater monitoring wells at a cost of approximately $30,000.

XL provided oversight of the remediation, with an eye toward keeping construction delays to a minimum and limiting the insured’s potential for long-term liability. The insured’s Pollution and Remediation Legal Liability (PARLL) policy responded to cover the costs of construction delays, disposal costs, analytical testing, legal fees, etc., which exceeded $350,000.

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Real Estate Developer (Former Manufacturing Facility; New Jersey) XL

Type: Pollution Liability

Product: Remediation Stop Loss (RSL)

Scenario: A 45-acre former manufacturing site was slated for cleanup so condominiums could be built. Volatile organic compounds and metals were detected in soil and groundwater. The total remediation was estimated at $2.2 million.

XL Environmental Underwriting provided a five-year Pollution and Remediation Legal Liability (PARLL) policy, which included $10 million worth of limits for other unknown contaminants and Legal Defense Expense. Remediation Stop Loss (RSL) coverage was provided at limits of $2 million over the estimated cleanup.

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Real Estate Developer (Joint Venture, California) XL

Type: Pollution Liability

Product: Remediation Stop Loss (RSL)

Scenario: A real estate developer was in the process of purchasing and developing large contaminated sites (and portfolios of smaller contaminated sites) to return them to productive use. The implementation of this strategy required sophisticated financing, state of the art environmental compliance, creative real estate development and asset management.

XL Environmental developed a risk management plan to specifically address the needs of the developer’s financing sources and its operational plan. Elements of the XL Environmental Underwriting plan included Remediation Stop Loss (RSL), Remediation Warranty and Business Interruption coverage.

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Redevelopment Project (Capping Remediation Cost, Pennsylvania) XL

Type: Pollution Liability

Product: Pollution and Remediation Legal Liability (PARLL)

Scenario: A 15-acre site was formerly occupied by a paint manufacturing facility and plans for redevelopment included the construction of a retail outlet center. The known cleanup costs were estimated to be approximately $600,000. The retail outlet chain parent company wanted to cap future remediation costs and protect themselves from potential third-party claims during construction.

XL Environmental provided a Pollution & Remediation Legal Liability (PARLL) policy with limits of $4 million. Remediation Stop Loss (RSL) coverage was structured with $1 million in limits over the $600,000 cleanup and a $100,000 buffer self-insured retention.

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Redevelopment Project (Capping Remediation Cost, Pennsylvania) XL

Type: Pollution Liability

Product: Remediation Stop Loss (RSL)

Scenario: A 15-acre site was formerly occupied by a paint manufacturing facility and plans for redevelopment included the construction of a retail outlet center. The known cleanup costs were estimated to be approximately $600,000 USD. The retail outlet chain parent company wanted to cap future remediation costs and protect themselves from potential third-party claims during construction.

XL Environmental provided a Pollution & Remediation Legal Liability (PARLL) policy with limits of $4 million USD. Remediation Stop Loss (RSL) coverage was structured with $1million in limits over the $600,000 cleanup and a $100,000 buffer self-insured retention.

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Superfund Site (Federal and State)

Type: Pollution Liability

Product: Clean-up Cost Cap (CCC)
Pollution Legal Liability Select® (PLL Select®)

Scenario: Waste oil company was found to have leaked oil and other liquids from on-site underground storage tanks and drums over its 30+ year operational history. In the 1980's, it became a state Superfund site and the state EPA identified over 2,900 Potentially Responsible Parties (PRPs) who sent waste oil to this disposal site.

After more than a decade of legal wrangling, attorney fees were piling up with no resolution or remediation in sight. With so many people involved, negotiators found it impossible to achieve an agreement and move forward. Many of the PRPs were concerned about the length of the cleanup, paying far more than their share and that new pollution conditions may arise.

Solution: To break the deadlock so that cleanup could begin, a cost-effective plan was proposed that, in essence, trimmed the number of responsible parties to one - the remediation contractor who was paid to assume the liabilities.

With the help of environmental insurance through AIG Environmental® that provides Clean-up Cost Cap coverage that insures the PRPs' future liability assumed by the contractor, an environmental cleanup contractor was willing to undertake cleanup and, during this cleanup, assume property ownership and the liability burdens of the major players for a fee. For the major players, contractor, and state EPA, the cash-out solution was made viable with the long-term environmental insurance coverage provided through AIG Environmental and supported by the financial strength of the member companies of American International Inc. ("AIG").

The end result is a cleaned up site that has been turned over to the municipality as a city park, while the environmental liability resides with the contractor, which is insured through AIG Environmental.

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Professional Liability

Architectural Firm XL

Type: Professional Liability for Architects & Engineers and Environmental Consultants

Product: Professional and Pollution Liability – Architects, Consultants, Engineers (PPLACE)

Scenario: An architectural firm insured by XL was hired to provide architectural and engineering services in connection with the construction of an athletic club. A club member alleged she was injured while in the club because of a laundry room door located in proximity to the ladies locker room door. The member, while standing in front of the locker room door, was struck in the hand by the laundry room door as a club employee was opening it. The member alleged that the architect was negligent in designing a dangerous condition in front of the ladies locker room door. The claim was for damages in excess of $15,000.

XL’s Claims staff immediately responded by informing the insured that coverage was afforded for the claim. The claim was settled for $12,000.  An amicable solution that avoided litigation and the fast resolution of the claim enabled the insured to focus on their business.

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Construction Manager XL

Type: Professional Liability for Architects & Engineers and Environmental Consultants

Product: Professional and Pollution Liability – Architects, Consultants, Engineers (PPLACE)

Scenario: A construction manager insured by XL was performing redevelopment of an airport terminal. A portion of the project involved structural steel welding, which required the use of a diesel generator to perform the welding operations. Several airline employees working in an office adjacent to the work site claimed they suffered inhalation injuries as a result of the fumes and gases.

XL’s investigation of the claim allowed some of the construction manager’s liability to be mitigated due to the negligence of the welding contractor that had positioned the diesel generator adjacent to the air intake vents for the building. XL then worked proactively with the claimants to ensure a speedy and fair resolution of the claim.  The construction manager’s Pollution & Professional Liability policy responded to cover the costs of the bodily injury claims and repair of the structural damage. XL’s thorough investigation of the claim and willingness to work openly with the claimants led to a quick and amicable resolution and minimal interruption of the renovation project.

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Design/Build Firm XL

Type: Professional Liability for Architects & Engineers and Environmental Consultants

Product: Professional and Pollution Liability – Architects, Consultants, Engineers (PPLACE)

Scenario: A city airport authority filed a claim against a design/build firm when the concrete designed for a number of runways constructed by the firm deteriorated significantly after only two years in service. Since 90 percent of the airport’s runways consisted of this new concrete, the airport was forced to significantly reduce the number of incoming and outgoing flights for a three-week period during emergency remediation. Damages for which the firm was held accountable included over $500,000 in lost profits and repair costs.

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Electrical Engineer XL

Type: Professional Liability for Architects & Engineers and Environmental Consultants

Product: Professional and Pollution Liability – Architects, Consultants, Engineers (PPLACE)

Scenario: An engineering firm insured by XL was hired to provide design services relating to a coal bulk storage and handling facility. The coal facility client contracted with the engineering firm to change the positions of two flow control gates so that the flow of coal being unloaded from a train could be directed to a desired storage location. Apparently, the process control switches on one of the gates were not correctly positioned and failed to properly perform during the period of the flow of coal and a quantity of a particular grade of coal was inadvertently directed to a storage location for a different grade of coal. As a result, a large quantity of coal existing in the storage location was contaminated, thereby reducing its value. Also, the flow of a particular grade of coal was directed to two ships’ cargoes, which also were to be of differing grades of coal, thereby contaminating these ships’ cargoes and considerably lessening their value. The claimant’s sued for damages in the amount of $810,000.

XL’s Claims staff promptly retained counsel to defend the insured’s interests. The parties reached an agreement to settle for $350,000. The case was resolved for significantly less than anticipated, lowering the amount of damages payment and saving significant legal fees to defend the case through trial.

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Environmental Consultant XL

Type: Professional Liability for Architects & Engineers and Environmental Consultants

Product: Consultants’ Environmental Liability (CEL)

Scenario: An environmental consulting firm insured by XL Environmental was hired to perform environmental consulting services for a valve manufacturing facility as part of a Brownfield project. Midway through the work, the manufacturer sent a letter to the insured threatening litigation and demanding copies of all of the insured’s original documentation on the project and the execution of various confidentiality agreements. Unsure of what information they were legally required to provide and/or sign, the insured notified XL.

XL’s in-house consultant and attorney were able to assess the insured’s obligation to provide documentation. They assisted the insured in drafting a response to the manufacturer that included only that information to which the manufacturer was legally entitled. After receiving the response and documentation, the manufacturer abandoned the issue. The client continued to work without further legal action from the manufacturer.

The quick response and expertise of XL Claims’ staff provided a favorable resolution, saving the client significant time and money addressing the unwarranted request for information and allowing them to focus on profitable business operations.

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Excavation Contractor XL

Type: Professional Liability for Architects & Engineers and Environmental Consultants

Product: Contractors’ Pollution Liability (CPL)

Scenario: A contractor insured by XL was sandblasting an aboveground storage tank at a facility, and in the process, released residuum from the blasting onto the property of neighboring homeowners. The material was contaminated with PCBs and lead. The property owners filed claims against the facility owner and the contractor for contamination of their properties and potential for future illness.

XL hired defense counsel to protect the insured’s interest. An XL claims counsel immediately met with representatives of the facility owner’s insurance company with the goal of settling the claim and limiting litigation.  The insured’s Contractor’s Pollution Legal Liability policy responded to cover its portion of third-party claims and remediation of the facility, which exceeded $200,000.  XL’s fast response and legal expertise helped to prevent lengthy and costly litigation and kept the insured’s liability to a minimum.

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Landscape Architect XL

Type: Professional Liability for Architects & Engineers and Environmental Consultants

Product: Professional and Pollution Liability – Architects, Consultants, Engineers (PPLACE)

Scenario: A landscape architect insured by XL was hired to design the vegetative cover for a landfill closure. The closed landfill was to be used as a community park. The cover was hydroseeded in early spring. During a summer thunderstorm, portions of the cover were washed away exposing and eroding portions of the clay cap. Due to an error in the topsoil mixture specification, the grass was unable to root deep enough to withstand a summer thunderstorm. The client filed a claim for $500,000 to cover the costs to repair the clay liner and to improve the topsoil mixture over the entire site.

XL’s Claims staff retained an architectural expert to review the specifications and to investigate issues at the landfill site. Based on the expert’s review and analysis, the claim amount was determined to be approximately $250,000. A settlement was reached with the claimant for $350,000, and the insured avoided the time and expense of litigation.

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Residential Contractor XL

Type: Professional Liability for Architects & Engineers and Environmental Consultants

Product: Professional and Pollution Liability – Architects, Consultants, Engineers (PPLACE)

Scenario: A residential contractor insured by XL unknowingly spread petroleum contaminated soil across a project site during fill operations for a housing project. The contractor was named in a lawsuit for exacerbating the extent of the contamination. Costs to clean up the project site totaled $250,000. The construction manager overseeing the project was also holding the contractor responsible for delays to the project and cost overruns exceeding $50,000.

XL’s consultants specializing in the construction industry visited the project site to investigate the claim. The investigation revealed that the construction manager had failed to order a Phase I site assessment of the project site that would have revealed the contaminated soil, thus mitigating the liability of the residential contractor. XL then coordinated the cleanup from beginning to end, allowing the project to continue.

The residential contractor’s General Contractor’s Pollution Liability policy responded to cover the portion of the remediation costs of which they were held liable. XL’s expertise in the construction industry and proactive investigation of the claim resulted in mitigated liability for this client. A well-coordinated and efficient cleanup of the site allowed the contractor to get back to work and the project to continue.

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UST Contractor XL

Type: Professional Liability for Architects & Engineers and Environmental Consultants

Product: Contractors’ Pollution Liability (CPL)

Scenario: A general contractor handling a major commercial building project subcontracted an underground storage tank (UST) contractor insured by XL Environmental to remove a UST and install an aboveground storage tank (AST). After successfully completing the job, it turned out that the XL insured had failed to obtain the required permits. When the general contractor was fined due to the lack of proper permitting, they in turn filed suit against the UST contractor to collect the fines.

XL conducted a thorough investigation of the claim, finding out in depositions that the general contractor (the claimant) had coerced the UST contractor into performing the job without the necessary permits in order to meet a tight building deadline. While the UST contractor will maintain some liability for its actions, it will be mitigated because of the coercion at the hands of the claimant.  The insured's Contractor’s Pollution Legal Liability (CPL) policy responded to pay for the expenses associated with the fine.  XL's expertise in obtaining depositions and analyzing the insured’s documentation supporting the general contractor’s coercion was instrumental in diminishing the client’s liability. Without a full and thorough investigation of the claim, the client would have borne significantly greater expense to resolve the claim.

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Residential Site Development

Industrial Contractor

Type: Residential Site Development

Product: Contractors Pollution Liability (CPL) and Occurrence (CPO) for Contractors

Scenario: An industrial contractor hired an environmental consultant to perform a Phase One Site Assessment at a site previously used for industrial purposes. From that assessment the environmental consultant reported negligible contamination.

Shortly afterwards, the industrial contractor excavated 357 feet of trench for one week at a cost of roughly $30,000 and stockpiled the soil on an adjacent property. Two months later, a grading subcontractor spread a portion of the soil throughout a large housing development.

Within six months from the excavation date, dioxin was discovered in the soil at the original industrial site. Subsequent investigation also found contamination at the adjacent property and housing development. Also, it was determined that contamination had seeped from the ground surface into a shallow aquifer which is located next to the housing development and feeds the water supply for 5,000 residents.

The US Environmental Protection Agency (EPA) investigated and found dioxin levels to be unacceptable at the three sites. Also, the EPA concluded that people who drink or come in contact with the water from the wells tapping the aquifer might be at risk. An extensive clean-up was ordered at the original work site, the adjacent property and the housing development. Numerous people including the developers of the housing tract and industrial site and the adjacent property owner filed claims for property and environmental damages against the environmental consultant and industrial contractor. Also, thirty homeowners filed claims for property damage and bodily injury.

Damages from multiple claims and cleanup costs for all properties exceeded $3 million. The environmental consultant and industrial contractor were found equally liable for all damages.

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Site Redevelopment

Broadcasting Company

Type: Site Redevelopment

Product: Pollution Legal Liability Select® (PLL Select®)
Pollution Legal Liability Real EstateSM (PLL Real EstateSM)

Scenario: A broadcasting company submitted a proposal for a $250,000 purchase and $2.5 million redevelopment of a city-owned site. Their plan included a state-of-the-art digital broadcasting station that would create more than 100 jobs. Formerly a Brownfield's property, the site had recently been designated "clean" by the EPA.

The clean-up, which was partially funded by a $30,000 EPA Brownfield's Assessment Grant was integral to a city-wide plan for revitalization. After lengthy negotiations over a 12-month period, the broadcasting company and city sealed the deal and construction began.

Shortly after breaking ground, a bulldozer uncovered several barrels of chemicals, probably buried during a past operation. While removing the barrels, one spilled. The chemicals flowed into an unprotected drainage pipe that dumped into a nearby river. A few days later, neighbors called local authorities and complained about unpleasant odors. Further investigation linked the odors to the chemical spill. Ten households alleged bodily injury and property damage and sued the broadcasting company. The court ordered the company to clean-up the river as well. Clean-up and claim settlement costs paid by the broadcasting company totaled $450,000.

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