October 24, 2002Client Alert

No Insurance for Cleanup Costs Under Illinois’ Voluntary Cleanup Program

An Illinois appeals court recently held in Northern Illinois Gas Co. v. The Home Insurance Co., Case No. 1-00-0832 (September 3, 2002) that a policyholder was not entitled to insurance coverage under its policies for costs NICOR incurred in cleaning up former manufactured gas plant sites. NICOR elected to cleanup these sites under Illinois' voluntary cleanup program. No consent decree or lawsuit was filed requiring the utility to undertake the cleanup. NICOR's insurance policies provided coverage for costs the insured is "obligated to pay by reason of the liability imposed upon the Assured [insured] by law ?." Since the VCP program was "non-adversarial" and did not obligate the insured to perform the cleanup, the court held there was no legal imposition of liability for which coverage was available under the policies.

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