VERTEX was retained by an international property and casualty insurance carrier to assist them in their review of claimed damages for remediation costs submitted by an insured pursuant to an environmental/ pollution insurance policy, pertaining to a bulk grain storage facility in Louisiana.
In November 2022, a fire occurred at the facility as a result of the spontaneous combustion of approximately one million bushels of soybeans stored within a silo. The local fire department responded and it took them almost three weeks to fully extinguish the fire. Containment structures were installed to contain the firefighting water and stormwater runoff. Firefighting water and stormwater that had accumulated within the containment was pumped into frac tanks and tested for multiple parameters. Because of elevated biological oxygen demand (BOD) and chemical oxygen demand (COD) levels in the recovered liquids, the liquids could not be discharged to the adjacent Ouachita River under the facility’s existing National Pollution Discharge Elimination System (NPDES) permit and required transport and disposal at an off-site facility.
VERTEX’s review concluded that the fire did not result in any subsurface impacts to soil or groundwater, nor impacts to the river, that required remediation, per applicable Louisiana Department of Environmental Quality regulations. The insured submitted approximately $7.9 million in damages (invoicing) for alleged remediation costs. VERTEX determined that approximately $4.7 million of the costs pertained to the off-site disposal of soybean waste and other solid waste consisting of materials damaged by the fire. The $4.7 million in costs were not considered by VERTEX to be environmental remediation costs, as defined in and covered by the insured’s pollution policy. Based on our analysis, the carrier’s loss was decreased by over 50% from the amount originally submitted and claimed by the insured.
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