In this Issue

	Technology Industry at Risk From Unknown and Uninsured Pollution Liability Exposures
	Beware of Policy Reporting Requirements - Untimely Reporting May Negate Your Coverage!

Quick Facts

An aging workforce is a major corporate concern. 1 out of every 5 Americans will be over the age of 65 by 2030, twice as many as 2006. (Source: Investment Company Institute)

Do not under estimate the risks associated with company cars.  42% of all work place related deaths were derived from vehicle crashes between 2001 and 2006.
(Source: US Department of Labor)

The Federal Trade Commission shows that 3.7% of American adults were victims of identity theft in 2005. (Source: Insurance Information Institute)

Technology Industry at Risk From Unknown and Uninsured Pollution Liability Exposures

Contributed by David R. Young, Account Executive
IMA of Colorado, Inc.

Development and integration of technology often involves the handling and disposal of hazardous wastes. However, coverage for pollution is almost always entirely excluded or severely restricted on commercial general liability policies. Environmental laws are changing almost as rapidly as technology, leaving the possibility that current, past or even future environmental impacts will result in currently unknown and uninsured exposures.

An environmental insurance policy provides protection for commercial real estate owners and any additional insureds, including mortgagees. It protects against potential discovery of contamination releases in need of cleanup and/or third party liabilities associated with pollution releases on, at, under, migrating from or migrating to insured properties. The policy terms and conditions are structured around specific insured properties but may be expanded to include non-owned locations such as disposal sites.

Because of the degree of difficulty that may arise in establishing the timing of releases in pollution matters, the policy is a “claims made” policy. This provides coverage for claims brought during the policy period, regardless of the timing of the release. Underwriting focuses on the environmental condition of the property, including historic risks, and the risk associated with current or proposed operations. Typically policies include a deductible generally starting at about $25,000. Policy terms up to five years for new and pre-existing conditions and up to ten years for solely pre-existing conditions are available. Options for limits that can be purchased can extend up to $50 million.

Aside from providing coverage for exposures that are otherwise frequently excluded in other insurance policies, environmental insurance may “grease the wheels” of a property divestiture, because coverage is easily assignable to other parties. Often both sellers and purchasers of property are named on a policy as a means to avoid extensive environmental due diligence investigations and/or negotiations regarding pre-existing environmental liabilities. Risk is merely transferred to a highly rated carrier. Additionally, the existence of environmental insurance may provide more favorable conditions for property financing. Lenders may be added as insureds for no additional premium.

Some points to note about environmental policies:

• Coverage is intended for third party claims or discovery of contamination.
• Risks from changing legal standards for cleanups are covered during the policy period.
• Known underground storage tanks may be scheduled to the policy.
• Similar in concept to general liability insurance in that if someone is harmed due to environmental conditions, this policy is designed to provide coverage for such claims that are otherwise excluded under most CGL policies.
• Coverage is not limited by “sudden and accidental” or other common limiting language found in commercial general liability policies.
• Financially sound insurance companies, such as AIG, Chubb, Zurich, ACE, XL, and others offer environmental policies.
• Premium is paid in full at the inception date of the policy.
• Pre-existing known and unknown environmental conditions may be able to be covered, both on- and off-site. Known conditions can be covered if they are below actionable levels, and under certain conditions even if above actionable levels coverage is attainable.
• Optional coverage may be added for loss of income that results from environmental cleanups.

For those parties that perform activities at off-site locations, contractor’s pollution coverage is available and is provided on a per job basis rather than on a location basis, and is written on an annual policy term.

Beware of Policy Reporting Requirements - Untimely Reporting May Negate Your Coverage!

Contributed by Jane Hinderscheid, CPCU
RJ Ahmann Company

“One of our clients is refusing to pay us. They called to tell us it’s because we didn’t meet their expectations and as a result they have incurred additional expenses and lost revenue. Our CEO has since spoken with them and is confident that we can work out their concerns and keep them as a satisfied customer.”

If this scenario sounds familiar, you may be surprised to learn how restrictive some errors and omissions policies are when it comes to meeting mandatory reporting requirements before coverage applies.

Today there are a variety of reporting clauses built into policies that can limit coverage, or exclude it altogether.

The majority of Professional Errors and Omissions policies are written on a Claims Made and Reported basis. Claims Made and Reported policies have a limitation of time to report a claim and have varying descriptions of what is considered a circumstance that must be reported. For example, in some policies, if anyone in your company was made aware of a circumstance within one policy period, but the errors and omissions insurance carrier was not notified until eight months later when suit papers were received, you may find yourself with no coverage even though you just renewed the policy with that same carrier. The carrier could cite failure to report the incident within the policy period when you first became aware of a circumstance.

Professional liability policies do not have long-standing traditional policy language. The identification of who should provide notice ranges from any employee to certain described individuals within an organization. Some policies require a claim to be reported even if received only in an oral statement; others state that it must be in writing. The length of a reporting period can vary, with some offering 60 or 90 days.