John J. Heft, Vice President, New Day Underwriting Managers, LLC writes a compelling article on Environmental Liabilities in the December issue of Multi-Housing News (MHN) real estate magazine.

Because of exclusions for mold in general liability policies, sizeable uncovered claims can wreck financial havoc for apartment owners if complaints to these problems are not tended to properly.

A leaking kitchen sink, for example, caused discoloration in the bedroom ceiling in the apartment below. The apartment complex owners merely did cosmetic patchwork, despite repeated complaints by tenants, who subsequently became ill, sued and won 1.4 million dollars in personal injuries.

Mold, microbial matter and lead-based paint, points out Heft, are consistently excluded on general liability policies, thereby causing significant environmental problems. Heft goes on to say, “other environmental risks include:

  • Contaminants from known and unknown historical usage/operations or neighboring properties
  • Construction debris containing hazardous materials
  • Sick Building Syndrome i.e. carbon monoxide, mold, or bacterial air releases from faulty heating, ventilation or air conditioning systems
  • Hazardous chemical storage (such as maintenance degreasers, pool chemicals, pesticides and herbicides used both indoors and outdoors)
  • Lead, asbestos, polychlorinated byphenols (PCBs)
  • “Midnight dumping” on vacant land parcels
  • Leaking underground or aboveground storage tanks or piping.”

There are ways to manage these risks, one being Premises Environmental Liability/Pollution Legal Liability (PLL). To read about this coverage and the entire article, go to http://www.multihousingnews.com/multihousing/content_display/features/property_management/e3if75f39c71ceea08273b00795fb0ead2a.

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