Q. What can states without cleanup funds do to get help with funding for cleanups?
A.First thing that a dry cleaner should do is look for all of his/her old insurance policies. Typically, the older the policy, the less restrictions they have regarding covering environmental claims. Drycleaners should look through all old bank records, and write down the name and company of all insurance brokers they have worked with.
Secondly, they should jot down a history of when they started at the location, who they purchased from, what types of stores were at that location (or adjacent) and what other insurance was part of property. Identify whether or not there was a previous drycleaner who may have contributed contamination. Finally, don’t do anything without expert advice. Often times if a drycleaner launches into a cleanup without notifying insurance carrier(s), reimbursement for money spent on site investigation and cleanup is not forthcoming.

Q. Why are insurance claims so significant in triggering insurance coverage?
A. Making a valid claim to your carrier can mean the difference between paying hundreds of thousands of dollars for a site cleanup and paying nothing at all. In most instances, a valid claim made to an insurance company will be defended. Among other things, this defense includes legal fees and site investigation activities.

Q. You recommend strongly then that a drycleaner not pay out-of-pocket expenses for cleanup first and later tender a claim to recover that loss of expenses?
A.It’s hard to say never, but in this case I would say no. It is a rare situation where an insurance carrier will reimburse a policyholder for expenses paid out pre-claim. I have had situations where a drycleaner was told by his insurance company that trying to settle the case out of court with his landlord was the right thing to do, only to be told later that this settlement couldn’t be reimbursed because he didn’t have a valid claim. Asking an insurance carrier to help figure out the road map doesn’t work.

Q. Which states have the best laws for helping drycleaners find insurance coverage for cleanup?
A.The states with the best insurance laws include Indiana, Colorado, Washington and Oregon. That being said, most states have laws that provide excellent opportunities for insurance coverage of environmental claims. The key is to know what the laws are in each state before you proceed with making a claim.

Q. If a drycleaner is waitlisted for a clean up fund, can he or she proceed with the sale of the business with some assurance that the value of his or her business is adequately protected? Or do you recommend other measures under these conditions?
A. In many states that have cleanup funds, a prospective purchaser agreement (PPA) will allow a property transaction to proceed prior to a regulatory release and sign off (of no further action). However, a PPA generally does not remove any contingent liabilities associated with the drycleaning site; but instead delays the inevitable site investigation and potential cleanup. It also allows the purchaser more time to discover any additional problems that often are the seller’s responsibility.
Furthermore, the involvement of a dry cleaner in a fund does not remove any contingent environmental liabilities from the site itself, nor does it fully protect the dry cleaner from any potential actions that might arise from contamination. These issues might be diminished values to property or to other properties that might be affected by contamination coming from the site. Cleanup funds do not protect a drycleaner from a citizen or third party suit associated with contamination coming from his/her site.

Q. How can drycleaners in states with cleanup funds evaluate where the best funding is for them?
A.Such “funds” may best be used for either actual cleanup efforts, known as “remediation”, for which insurance dollars are generally more difficult to recover, or for sites at which such insurance dollars or other responsible parties cannot be identified. Cleanup fund dollars may also provide seed money to perform any insurance archaeology or pay for other efforts that can identify where dollars for cleanup may be found.
The bottom line is that a fund with enough money to pay for cleanups is a good thing. The problem is that many states do not have enough money in the fund to cover cleanup at this time.

Q. Are there any state funds adequate for covering cleanup costs so that insurance coverage can remain a drycleaner’s business asset?
A. The funds in Kansas and Florida appear to have adequate funding at this time to pay for site investigations and remedial activities. Unfortunately, the cost of the cleanups and the number of drycleaners that have soil and groundwater contamination makes it very difficult for most states and fund members (those paying for the fund) to adequately finance the programs.

Q. In sum, what is an ideal situation for a drycleaner in a state with a clean up fund that also enables him/her to benefit from insurance coverage?
A. The ideal situation is a fund that allows dry cleaners to pursue any and all avenues to bring dollars to the table and be there as a safety net to cleaners that do not have other avenues to pursue. In addition, the “Fund” can be used to seed initial efforts, such as finding insurance dollars to bring to the table, as wells as providing money for new insurance products that may be applicable to protect the dry cleaner from any future liabilities associated with their ownership of the business and/or property.