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Claims Story

In life, there are both good and bad surprises. Finding two leaky oil tanks buried on association property definitely qualifies as a bad surprise.

That’s the nightmare one condominium association insured by CAU recently faced. While cleaning up from a flood in its boiler room, a plumber noticed oil floating on the water. An investigation soon turned up the source of the oil.

There were two underground storage tanks (USTs) buried on the property that nobody knew were there. They had been capped off 25 years ago when the property was converted from apartments to condominiums and now they were rusted through.

The tanks were leaking oil into the soil and ground water, and tests confirmed major contamination. For awhile, the association feared that the contamination had spread to an adjoining property that it did not own. Although that turned out not to be the case, the association was still facing a staggering clean-up bill.

Due to the increase in recent years of reported claims like this one, many insurance providers have removed pollution coverage from their policies. Fortunately for this association, CAU is not one of them. In fact, CAU’s Environmental Impairment Liability (EIL) coverage is what saved this association from a major financial hit.

As part of the coverage, a pollution liability expert was hired to investigate the loss, and a remediation plan was soon put in place. Approximately 1,000 tons of soil was removed and ground-water monitoring wells were installed. Today, ground water samples continue to be taken and, while residual pollutants continue to show up, the concentrations are low and are above standards.

Because the association did not know the oil tanks were there, the EIL coverage paid for the $142,000 in testing and remediation efforts needed (known USTs are excluded from EIL coverage unless specifically scheduled on the policy). If the neighboring land had been contaminated, EIL coverage would have paid for that clean up as well.

Environmental claims like this impose a tremendous financial burden on associations that do not have adequate coverage. This association may have dodged a bullet considering what they might have had to pay without CAU’s Environmental Impairment Liability coverage.

Click here for more information about CAU’s Environmental Impairment Liability coverage.