Environmental Liabilities and Insurance Law in the United States

State common law in the United States (US) has long imposed liability for bodily injury and property damage caused by persons that expose individuals to pollutants as well as causing other harm to them. In the 1970s, the scope of liability for environmental damage was substantially increased when the US Congress enacted extensive permitting legislation for waste, water and air pollution. Among other things, the legislation required permit holders to clean up environmental damage caused by their operations. In 1980, the scope of environmental liabilities was increased again when Congress introduced a programme, called the Superfund programme, and liability for cleaning up historic land contamination that continued to pose a serious risk to human health and the environment. The legislation also introduced liability for restoring damage to natural resources. Enforcement of the Superfund programme resulted in insureds being liable for many millions of dollars of costs for cleaning up the contamination. In turn, insureds claimed against their commercial general liability policies, resulting in massive litigation. Another result of the increased environmental legislation was the introduction of pollution exclusions in primary and excess general liability policies. In turn, various insurers developed environmental insurance policies that specifically provide cover for the liabilities as well as policies that provide evidence of mandatory financial security for specified environmental liabilities. This chapter examines environmental liabilities in the US, insurance for them, and mandatory requirements for insurance policies and other financial security instruments and mechanisms.