Environmental claims can impose a tremendous financial burden on condominium and homeowner associations that do not have adequate insurance protection. Due to a dramatic increase in pollution claims, many insurance companies have completely removed pollution coverage from their general liability policies.

Preferred Property Program®, a subsidiary of JGS Insurance, is pleased to offer this valuable protection to condominium and homeowner associations. Written through AXA XL Company. Environmental Impairment Liability (EIL) coverage provides protection against the following risks of financial loss:

• First and third-party coverage for pollution conditions
• Cleanup expenses
• Legal defense expenses incurred in the investigation, adjustment, settlement and defense of a claim

Some common environmental exposures faced by condominium and homeowner associations include:

• Contaminants from historical usage or neighboring properties
• Hazardous chemical storage, e.g., swimming pool chemicals, pesticides/herbicides
• Past landfills, lagoons and other solid waste disposal areas
• Past/present use of septic systems for disposal of wastes
• Unknown history of past operations performed on site
• Unknown leaking underground/aboveground tanks or piping
• Spillage/stained soils

The following examples demonstrate just some of the many ways in which condominium and homeowner associations can incur environmental liabilities:

Unknown Underground Storage Tank

An association was in the process of excavating to make pipe repairs when a previously unknown underground storage tank was discovered. Investigation revealed that the oil leaking from this tank had contaminated the soil and groundwater onsite and migrated to a neighboring community. Preliminary studies to determine the extent of the contamination cost over $30,000. The cleanup costs exceeded $175,000.

Phosphorous Pollutes Pond

An association routinely applied phosphorous-rich fertilizer to the community’s lawns. During a heavy rain, phosphorus was washed into a pond on a neighboring property. This overdose of phosphorous nutrients in the pond caused an algae bloom and severely harmed aquatic life. Property damage and cleanup costs exceeded $55,000.

Down The Drain

A condominium community leased retail space to a dry cleaner that subsequently went out of business and vacated the premises. An investigation found that the dry cleaner had been dumping solvents down the drain. The chemicals eroded the sewer pipe and were released into the surrounding soils and groundwater. The condominium association was responsible for remediation costs which totaled more than $1 million.

Cancer-Related Symptoms Linked To PCB-Contaminated Soils

Residents of a group of association buildings exhibited an unusually high rate of cancer-related symptoms. It was discovered, for the first time, that their buildings were on the site of a former lighting fixture manufacturer that used polychlorinated biphenyls (PCBs), a suspected carcinogen. Large quantities of PCBS were found in the soil under and around the affected buildings. Cleanup costs exceeded $200,000 and many lawsuits are pending from the affected parties. Bodily injury awards may exceed $1 million.

Leaking Unknown Underground Storage Tank

While cleaning up from a flood in a boiler room, a plumber noticed oil floating on the water. An investigation found that two previously unknown underground storage tanks (USTs) were buried on the property. The tanks, which had been capped off 25 years ago when the property was converted from apartments to condominiums, were rusted through.

The tanks were leaking oil into the soil and groundwater, and tests confirmed major contamination. The association was faced with a cleanup bill of more than $140,000.

Associations can protect against the high cost of environmental claims like the above with effective, affordable EIL protection from Preferred Property Program®.

• Protects your bottom line with a superior form of risk transfer
• Provides financial stability for low-frequency, high-severity pollution claims
• Protects against financial and operational losses, including cleanup costs, third-party bodily injury and property damage claims, and legal defense expense
• Provides important coverage that your general liability policy may exclude

$250,000, $500,000 or $1,000,000 — Environmental losses are low-frequency, high severity events – please don’t risk your client’s bottom line.