Baltimore Utility Plant Environmental Insurance Claim

The Challenge

Vertex was retained by an international property and casualty insurance carrier to assist in the review of a claim submitted by an insured pursuant to an environmental/pollution insurance policy pertaining to a utility plant servicing a university’s medical school and hospital. The claim resulted from an inspection of the plant conducted by the U.S. Environmental Protection Agency (EPA), during which violations of the plant’s National Pollutant Discharge Elimination System (NPDES) permit and the federal Clean Water Act were identified. These violations pertained to multiple chronic exceedances of the industrial discharge limits specified in the permit for copper and total residual chlorine over a five-year period, as well as a failure to calibrate the pH meter used to monitor discharges at two outfall locations (with ultimate discharge to Baltimore Harbor) prior to sampling.

The Solution

The anticipated claimed costs were related to actions the plant would have to take to modify its treatment process in order to meet the required permit limits for copper and chlorine discharges. Vertex reviewed these costs to determine whether they were related to regulatory compliance requirements or the remediation of a confirmed environmental impact or pollution condition.

The Outcome

Based on the conclusions of Vertex’s review and interpretation of the technical information provided, coverage was not provided by the carrier because there were no incurred costs related to the remediation of environmental impacts or a pollution condition for which the policy provided coverage.

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