Governor Kitzhaber signed Senate Bill 814 into law last week. This bill substantially amends the Oregon Environmental Cleanup Assistance Act in a manner very favorable to policyholders prosecuting claims seeking insurance coverage for claims arising from environmental contamination. First, the law makes it clear that the anti-assignment language contained in most general liability policies only applies to pre-loss assignments. This means that a company that was transferred or conveyed rights under a policy during a corporate transaction can recover under the policy so long as the loss occurred before the assignment. This is often required because the discharges leading to a claim often occurred decades ago, and because there are often multiple corporate changes between the time of the discharge and the time of the claim.
Second, the law makes it clear that the cost of remedial action taken to prevent third-party property damage is recoverable from the insurer even if the remediation action occurs on property of the insured. This provision is intended to clarify that the cost of cleaning up soil on a policyholder’s property, which is implemented to prevent migration of contamination to groundwater, is covered under general liability insurance policies despite the insurance industry’s assertion that the cost of such remedial action is excluded by the so called owned property exclusion.
Third, the law cuts off insurer contribution rights against insurers that have entered into a good-faith settlement with the insured regarding an environmental claim. Further, there is a rebuttable presumption that all binding settlement agreements are good-faith settlements, and that presumption is not rebuttable if the settlement is approved by a court after notice to other insurers. Under existing law, insurers were hesitant to settle with insureds because they feared contribution claims from non-settling insurers. These provisions make it much more likely that insurers will enter into early settlements with their insureds.
Fourth, the law sets out a list of unfair claim settlement practices and, for the first time, provides insureds with a right to go to court to seek damages, costs, and attorney fees when aggrieved by such practices. Until this bill was signed, the current statute included a list of unfair claim settlement practices but did not provide a private right of action. Thus, insurers frequently ignored communications from their insureds and/or pestered the insured with repetitive, unnecessary, redundant, and duplicative questions and requests for information.
The last major provision requires an insurer with a duty to defend to provide defense counsel who are experienced in handling the type and complexity of the environmental claim at issue and to look outside the insured’s community if such counsel are not available locally. The rates paid to defense counsel must also be based on the regular and customary rates for the type and complexity of the environmental claim at issue. These provisions address the problem of insurers hiring inexperienced lawyers to handle complicated environmental claims or refusing to pay the fair billing rates of lawyers experienced in such claims.
See the link below for a summary of legislative activities undertaken regarding the bill.http://gov.oregonlive.com/bill/2013/SB814/
Miller Nash has a dedicated team of attorneys who represent both businesses and individuals facing insurance-coverage disputes with their insurance company. Our goal is to maximize each policyholder’s potential insurance recovery in the most cost-effective manner possible. To achieve this goal, our attorneys will work through all phases of an insurance-coverage dispute, including trial when necessary.