Environmental Sudden and Accidental Pollution Coverage Risk Insurance

The word “sudden” had been litigated extensively in many courts, and was initially interpreted to mean “unexpected”, rather than “quick”.  The word “accidental” was often interpreted as “unintended”.  This broad interpretation of sudden and accidental, i.e., “unexpected and unintended”, rather than “quick”, resulted in many court decisions that were advantageous to the insured because of the fact that the unclear interpretation of the words resulted in ambiguities. Over time, this broad, ambiguous interpretation of sudden and accidental became narrower. In recent years, sudden and accidental has been interpreted to mean that it takes place in its entirety at a specific time and place. Insureds may have difficulty demonstrating that a pollution condition or release of pollutants was sudden and took place at a specific time.

Many, but not all, environmental insurance policies provide coverage for both sudden and accidental and gradual pollution releases. There is no distinction between one or the other in most environmental insurance forms. With gradual coverage in place, the insured does not have to be concerned about meeting the reporting requirements outlined in the time element trigger, or the potential ambiguity of older sudden and accidental forms.

Non-sudden and gradual coverage in premises specific forms is not without its issues as well. It is important for insureds to understand the difference between “unknown” pre-existing conditions and “new” conditions. Sudden & Accidental is typically a coverage enhancement on a Contractors Pollution Liability, Site Pollution Liability, or Package policy for an environmental facility.

As an agent, it’s your responsibility to understand potential gaps in coverage and to address them with your client. With Action Over claims, there are a lot of common misconceptions. It’s assumed that these claims happen mostly in NYC/5 boroughs and that they don’t occur “upstate.” This is not true. Action Over claims can happen anywhere, they may just be more prevalent in this region.

It’s also believed these claims are typically a result of a fall from height. This is true; many of these incidents are the result of a fall from scaffolding, ladders, tables, roofs, etc. However, UST installation and other excavation services may also lead to an Action Over claim since falling from ground level into a hole is considered a fall from height. Another misconception is that consultants (vs contractors) don’t have Action Over claims. Even consultants and engineers occasionally climb a ladder with their clipboard and are just as likely to fall as a contractor taking a sample.