Environmental Claim Cost Analysis for Personal Care Products Manufacturing Facility

The Challenge

Vertex was retained by an international property and casualty insurance carrier to assist them in their review of claimed damages for alleged remediation costs submitted by an insured pursuant to an environmental/pollution insurance policy, pertaining to a cosmetics and personal care products manufacturing facility in Tennessee. The claim included alleged impacts to soil and an adjacent creek from phenol, formic acid, acetone, ethanol, volatile organic compounds (VOCs), and elevated levels of chemical oxygen demand (COD) resulting from discharges from the facility.

The Solution

Vertex reviewed damages and invoicing submitted by the Insured, consisting of 40 invoices totaling approximately $1.5 million, to evaluate their reasonableness and necessity.

The Outcome

Vertex’s review identified approximately $500,000 in invoiced costs attributable to facility operational activities including the containerization and disposal of industrial wastewater generated at the facility that could not be discharged to the sanitary sewer system for an extended period of time. Vertex also identified costs billed by the Insured’s environmental consultant for regulatory compliance services and routine compliance sampling activities that were performed at excessive billing rates. These activities were not considered by Vertex to be related to the remediation of environmental impacts resulting from releases at the facility, to which the claim pertained and for which the Insured’s policy provided coverage. As a result, Vertex’s analysis and findings supported a reduction in the claimed loss amount, in accordance with applicable provisions of the Insured’s policy, by approximately one third.