Potential Liability of Property/Casualty Insurers for Costs of Cleaning Up Hazardous Waste Sites

T-RCED-90-109: Published: Sep 27, 1990. Publicly Released: Sep 27, 1990.

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GAO discussed the property and casualty insurance industry's potential liability for costs to clean up the nation's hazardous waste sites, especially Superfund sites. GAO noted that: (1) there are about 1,200 sites on the Environmental Protection Agency's National Priorities List for Superfund cleanup; (2) parties responsible for contaminating the sites were primarily liable for cleanup, and Superfund absorbed such costs only when responsible parties could not be found; (3) 20 insurance organizations accounted for about two-thirds of the $22 billion in direct liability premiums written in 1989; and (4) court interpretations of insurance contracts split in favor of the insurer and the insured party. GAO believes that: (1) there was insufficient information to accurately predict whether property and casualty insurers would be seriously harmed by liability for hazardous waste site cleanups; (2) the total cost of cleaning up currently listed sites could reach about $40 billion and seriously affect insurance industry surpluses; and (3) the full dimensions of insurer liability and how far courts will hold insurers responsible for cleanup costs may not be known for many years.

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