Case Study: Combined Cost Cap & Pollution Legal Liability
Published on: 02-Apr- 2007 | Comments: 0
A Marsh client acquiring three old fossil fuel plants wanted to cap their liability for the cost of clean up. They also wanted coverage for additional environmental exposures, such as potential third party toxic torts, natural resource damage, and property damage suits.
Both the seller and the buyer had performed due diligence, yet neither party could develop clear and concise costs for estimated clean-up liabilities. The Seller estimated the cost at between $5 million to $50 million. Coverage was essential, but work plans outlining estimated clean-up liabilities or regulatory concerns for clean-up actions had not yet been devised.
Marsh enlisted the services of Capital Environmental, a leading waste services company, to help define liabilities and highlight areas of concern. Their efforts helped craft broader coverage under the Pollution Legal Liability policy.
Marsh developed a Cost Cap solution to cap liabilities at an expected cost of $4.6 million and placed a Pollution Legal Liability Program, which provided no exclusions for future events for any of the same constituents at the sites where the problem existed.
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