As Published in the June Issue of Drycleaners News
How many dry cleaners do you know that own their business and building? Dry cleaners that thought they had an asset only to find out that it is contaminated and will cost a lot of money to clean-up.
How many dry cleaners have always followed the law and managed a clean and respectable business, only to learn that the rules they had followed for years have changed and are now more stringent?
How many dry cleaners do you know that want pass the business on to their children, but are afraid of handing them an environmental liability?
Retroactive enforcement of new standards is usually not permitted when laws change. But there is no limit to corporate environmental responsibility. Regulatory agencies and landlords have sued many companies and individuals to clean-up contamination they didn’t know existed. We call these “long-tail liabilities”.
These situations have become all too common for the dry cleaner. In today’s environment, dry cleaners have become a common target of landlords, regulatory agencies and private drinking water providers. Banks lending money to perspective purchasers of property and businesses almost always require a Phase II investigation if the businesses and property owners are located near a dry cleaner.
Most dry cleaners simply don’t have the financial wherewithal to pay for the cost of the investigations and defense of law suits. Fortunately, dry cleaners have a friend and that friend has a potential solution.
EnviroForensics and PolicyFind help dry cleaners by locating old insurance policies. The process of locating old or historical insurance policies is known as insurance archeology. You see, comprehensive general liability (CGL) insurance, written before the mid-1980’s, contained language that can protect and defend against law suits and claims brought against the dry cleaner. In fact the language in these older policies in general terms states that the insurance carrier will defend the policyholder against law suits and claims associated with the sudden and accidental or unexpected release of dry cleaning solvents into the environment. Policies predating the early 1970’s are even more favorable to the policyholder, as there was no pollution exclusion language in the policies.
EnviroForenscis and PolicyFind have helped dozens and dozens of dry cleaners across the country rebuild their investment, literally turning their environmental liabilities into assets and protecting them from huge expenses and financial losses, says Stephen Henshaw, President of EnviroForensics.
EnviroForensics and PolicyFind has even helped former dry cleaners long since retired and out of the business, many whom were mom & pop operators who may have the few resources to protect their rights or alleviate environmental claims.
That was exactly the situation Bob and Inez Heidinger of Chico, California faced. They owned Heidinger Cleaners from 1952-74. In 2003, the state Attorney General’s office sent them a large bill. When the bad news came in the mail, Bob was 87 and suffering from Alzheimer’s disease. Inez was 83 and had bone cancer that eventually proved fatal.
The Heidingers were billed hundreds of thousands of dollars to clean a commonly used dry cleaning solvent from Chico’s underground water supply. The Heidingers had properly treated the solvent when they owned the cleaners decades before.
All the former owners of Heidinger (later College Cleaners) received a bill or threat of prosecution, as did former owners of other dry cleaners. They are mostly elderly and retired – one was deceased – and did not have the money to pay the huge clean up bill.
The current owner of the building that once housed Heidinger Cleaners also was billed. He claimed not to have known the building’s history. It’s been a coffee shop for years.
Barbara Heidinger, Bob and Inez’s daughter, says, “We were insured but we had no proof. We had thrown away old records when we cleaned out the house a few years ago.”
Policy Find’s painstaking research in courthouse records and other venues paid off for the Heidinger family.
“Finding the insurance was a huge relief,” says Barbara. “My dad was ill and my mom was still alive. If we hadn’t found it, they (the State of California) could have taken everything. My parents would have lost everything.”
If you get anything out this article it should be – Locate and Safely Store You’re Old Insurance Policies – they could prove to be worth hundreds of thousands of dollars.
Stephen Henshaw is a hydrogeologist and President of EnviroForensics, who specialize in investigating and cleaning up dry cleaning solvents in soil and groundwater across the country. David O’Neill has a law degree and is the Director of Investigations for PolicyFind. Together these two companies are committed to helping dry cleaners solve difficult problems.
Mr. Henshaw and Mr. O’Neill routinely write blogs and articles on environmental and historical insurance related matters. For more information contact them on-line at www.enviroforensics.com and www.policyfind.com.