Environmental legislation proposed during the 2014 Indiana Legislative Session was a shot across the bow to Indiana insureds. As originally introduced, HB1241, would have drastically impacted environmental insurance coverage in Indiana for all those holding title to real estate. The proposed legislation was an attempt to enforce the pollution exclusion clauses in Commercial General Liability policies in Indiana both retroactively and prospectively.
This proposed legislation undermined the case law precedent established by the Indiana Supreme Court’s 1996 decision in American States Insurance Co. v. Kiger, 662 N.E.2d 945, that rendered the absolute pollution exclusion unenforceable in Indiana due to the ambiguous language in the exclusion. This ambiguity was construed in favor of the insured by the Court, and has facilitated Indiana insureds’ recovery for environmental claims associated with their property since such time.
There were many concerted efforts of interested parties that would have been negatively impacted by this legislation that opposed the legislation, and ultimately, it failed. And, while the Kiger decision has been repeatedly upheld by the Indiana courts, we know that the pollution exclusion will continue to be tested by insurers and insureds alike. We do not know, however, whether the next proposed piece of legislation will survive and/or whether the next modification to the pollution exclusion will withstand the Court’s scrutiny to limit an insured’s right to recover.
In an effort to avoid any limitation on an insured’s rights, prospective commercial real estate buyers and sellers should accelerate their actions to address possible environmental issues, especially former gas station, industrial and dry cleaner sites. Otherwise, such property owners’ recovery rights against their insurers may be limited.
For additional information about this or any other environmental law matter, please contact KDDK attorney Monica Edwards at (812) 423-3183 or medwards@KDDK.com; or contact any member of the KDDK Environmental Law Practice Team. Our experienced environmental attorneys take pride in professionally and cost-effectively steering our clients through environmental due diligence, site investigations and the remediation process.
About the Author
Monica E. Edwards, an attorney at Kahn, Dees, Donovan & Kahn, LLP (KDDK), in Evansville, Indiana, is a member of the firm’s business, environmental, intellectual property, and real estate law practice teams. Monica draws upon her scientific experience as a technical services chemist and prior environmental consultant in her practice of environmental law. Her background helps her assist clients in performing environmental due diligence, negotiating environmental settlement agreements, coordinating site clean-ups, prosecuting historical environmental insurance claims, and recovering environmental defense and indemnity costs.