Hazardous Waste

Pursuant to a legislative requirement, GAO provided information on the availability of insurance for individuals liable for the release of hazardous substances into the environment, particularly the: (1) judicial interpretation of pollution insurance policies; (2) frequency and severity of insurance claims; and (3) economic impact of pollution liability on the insurance market.

GAO found that: (1) although more than 100,000 companies generate, handle, and dispose of hazardous substances, few carry pollution liability coverage; (2) only one insurance company actively markets pollution insurance and it provides maximum annual coverage of about $12.5 million; and (3) although 1985 insurance claims payments were generally low, these claims were not necessarily indicative of the eventual magnitude of the insurance industry's payments. GAO also found that: (1) the Environmental Protection Agency (EPA) has not met the requirements of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to establish the financial responsibility of all companies subject to pollution liability; (2) although the courts consistently hold companies liable for cleanup costs, pollution victims generally find it difficult to receive compensation; and (3) although judicial interpretation of pollution insurance contract coverage varies, it does provide a basis on which to draft provisions that could help reduce variability in the future.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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