When it comes to Public Liability risks, there are events that can arise years later that you may need to go right back to policy that was in force years ago. However, would it still respond?
Then there are the Directors and Officers Liability exposures (which in this case would be Association Liability) and if they would respond.
Take the current Victorian CFA contamination scare which now involves 13 deaths and more than a dozen people suffering serious illnesses. Authorities are beginning to investigate claims the CFA knew of dangerous chemical exposures.
As calls went out for an independent inquiry, a lawyer who recently left the CFA board told the Herald Sun a class action against the CFA would have a good chance of success. But would you be able to claim under any of the Liability policies that they may have?
The contamination centres around the town of Fiskville on a property owned by the CFA where people have reported too many coincidental events even leading to the Premier Ted Baillieu backing a full inquiry. Former footballer Justin Madden, had a mother-in-law, who worked in their Fiskville kitchen and died aged 50 of bone cancer, said there were serious questions to be answered about the use of chemicals on the site.
Another person who lived next to Fiskville as a child said dead fish regularly appeared in a large dam at the back of the CFA property and a dam on his parents’ farm lost its fish and yabbies.
A CFA employee claimed Fiskville management tested the water table below the training centre in the early 2000s for possible contamination from chemicals.They said there was no conclusive evidence of a cancer cluster.
The developments came after the Herald Sun published revelations by former CFA chief offficer Brian Potter, who has suffered multiple cancers and a serious auto-immune disease for 15 years. He worked as an instructor at Fiskville.
The investigation also detailed the deaths of nine people who died from cancer and other illnesses and eight other cases of people who had suffered serious illness.
It was revealed the CFA had been repeatedly advised to warn people who lived and worked at Fiskville of their exposure to carcinogenic chemicals detailed in a scientific report the CFA commissioned in the late ’80s.
Former CFA board member and lawyer David Gibbs said he believed there was a case against the authority. Mr Gibbs said as many as 100,000 people might have used the facility.
For the CFA people who worked at Fiskville for a period of years the coincidences are just too significant. Many people discussed the exposure issues but didn’t speak up because they feared losing their jobs.
Read more: http://www.news.com.au/national/country-fire-authority-in-cancer-timebomb-claim-at-fiskville/story-e6frfkvr-1226215704628#ixzz1foXwN58O
But why would we question that a liability policy may respond or it may not? First it has to be shown to be caused by the Insured’s activities or actually is the responsibility of the Insured. It then depends on whether the contamination was known about in advance. A liability policy usually will only cover a pollution event if it was sudden or accidental. It is likely the Public Liability policy will be a “loss occurring” wording so the event needs to be pin-pointed to an actual date it occurred. However, even if the Public Liability policy was a “claims made” one, which any Directors and Officers Liability policy will be, then unless the contamination can be shown to be sudden and accidental, it is unlikely the policy would respond. Many D&O policies exclude pollution defence costs.
Then for a Directors & Officers policy to respond, it needs to be a Wrongful Act which is usually defined as an error or omission along with related acts. If a Board or committee knew there was a problem and deliberately chose to ignore it, then it could be viewed as a deliberate act rather than a mistake. You would reasonably expect this would be a declined claim with their insurers.
Then it could depend on what sort of pollution. There is already a comprehensive exclusion for asbestos related claims. At this stage we are not fully aware of what sort of actual contamination.
One of the reasons why Liability claims are called “long tail” matters is because what stretches the matter out is not just waiting to bring a matter to Court or the long negotiating period, but the time needed to investigate the matter fully from all angles so the cause and responsibility can be established. So on this matter, we will be waiting a while.