By Becca Cole, Associate Account Executive
Occasionally, Beacon Hill is asked to help place coverage for something outside the usual realm of environmental exposure. One of the more interesting accounts we worked on was an old theater building being renovated by the municipality and taken over by a new tenant; the tenant was looking for Site Pollution Liability coverage unrelated to construction. Site Pollution Liability is a common coverage request, but this particular case had a few details that took it beyond the ordinary. Historically, the building had been a performing arts theater and hotel; however, the basement contained a bowling alley that had been used as an indoor firing range by the local police department in the 1940s.
Before the remodel began, a full Phase 1 study was performed to identify the existing environmental concerns on the property. As lessee of the building, the insured was looking for coverage for historic pollution conditions that became evident after they took over the building, but which were not identified during the Phase 1 study. However, the Phase 1 report did find asbestos, lead paint, PCBs, and possible mercury components, as well as a removed underground storage tank, exclusive of the former firing range, which constituted significant environmental exposure. Additionally, even though the contractors performing the work carried their own insurance, the extensive renovation itself created additional exposures. Clearly there was a need for comprehensive coverage.
As part of the renovations, the firing range was undergoing lead abatement. Our original quotes included an endorsement specifically for the firing range, which provided liability coverage for the exposure as documented in the Phase 1 report but excluded cleanup costs for lead dust at or emanating from the firing range. The endorsement included language that once this condition was remediated and the carrier was provided with “no further action” documentation from a regulatory entity, the exclusion would be removed. Prior to binding the policy, abatement and cleanup for the firing range were completed. An environmental consultant who had been monitoring the process issued a report confirming that remediation was complete and lead levels had been returned to an acceptable level. The carrier then removed the cleanup exclusion relating to lead bullets so that the policy would respond to any new conditions that emerged in this area.
It’s interesting to note that at one point during the quoting process, it was thought that the remediation process would not be removing all of the bullets from the walls of the firing range. Due to the depth in the walls, the contractor planned to encapsulate the bullets in place. The carrier advised that this exposure would in fact have been covered under the policy, since the lead exclusion left on the policy only excluded lead abatement and removal activities.
This was a difficult exposure, but thanks to our excellent environmental markets, we were able to find several carriers who were willing to work with us and our agent to resolve the issues and build a program to meet the needs of this unusual situation. The program that was finally bound included first party cleanup and third party liability for new and existing pollution events using a very broad definition of pollutants. The carrier also added a Disclosed Documents endorsement listing the Phase 1 study in order to provide coverage for known pollution conditions disclosed in that documentation that would not otherwise be excluded under the policy. Thanks to the diligence of the account executive and agent and the flexibility of our underwriter, we were able to write coverage that met or exceeded this insured’s needs.