Asbestos Insurance: E.P.A. Analysis Finds Little Worry but Little Coverage
Washington--Many schools are hiring inadequately insured consultants to help them comply with the federal asbestos law, and so could be creating serious liability problems for themselves years in the future, the findings of an unreleased federal study suggest.
School officials generally believe that they are adequately protected with insurance against future asbestos-related suits, according to the study by the Environmental Protection Agency.
The report makes clear, however, that many of the accredited inspectors, management planners, and contractors used by schools do not have the long-term coverage that may be needed. Moreover, some of the businesses cannot obtain any insurance policy at all, the study states.
As a result, observers are warning, schools may be especially vulnerable to lawsuits 20 or more years from now, when those exposed to asbestos during the current wave of abatement activity would be most likely to develop related diseases and file suit.
Because many of the consultants will no longer be in business and their insurance policies will be invalid, schools may bear the brunt of these personal-injury suits, experts in the field point out.
The study, which the Congress ordered the epa to complete by last April as part of the Asbestos Hazard Emergency Response Act of 1986, is expected to be released during the next several weeks.
The law required all public and private schools to inspect for the cancer-causing substance, and to4write by last October plans for containing it. The Congress voted last summer to allow schools that could not meet the deadline to seek a postponement until May 9.
The gradual easing of the liability-insurance crisis of the early 1980's has enabled most districts and asbestos contractors to obtain some form of insurance, the report notes. But the engineers, architects, and others who inspect schools and write management plans frequently have been unable to obtain coverage.
That inability "generally has not slowed asbestos-abatement activity in schools (including the inspections and development or implementation of management plans)," the report states, "because [schools] have not required asbestos consultants to demonstrate financial assurance in consideration of the general unavailability of insurance."
Although the agency did not attempt to analyze the quality of the insurance offered, the report notes that virtually all of the policies issued are of the "claims-made" variety, as opposed to the "occurrence-based" insurance that used to be supplied.
Claims-made insurance covers only those claims that arise during the time the contractor pays premiums. Occurrence-based insurance, in contrast, covers claims that arise from a specific activity even after the contractor has stopped paying premiums.
Because asbestos-related lawsuits may be filed decades after a particular job has been completed, claims-made insurance offers little real protection, argued Edward R. Kealy, director of federal programs for the National School Boards Association.
Moreover, none of the major insurance carriers offer asbestos policies because of the perceived high risk. Insurance-industry officials say that asbestos policies purchased from smaller or more specialized firms may prove to be less reliable in the long run.
"What looks like adequate coverage now won't look so good down the road," Mr. Kealy said in an interview. "The problem is, who is going to be there when the claims come due?"
"The problem for school districts," he added, "is that when these things hit, the 'deep-pockets' theory takes over."
To limit schools' future liability, some members of the Congress are calling for legislation to require all asbestos workers to prove they can assure financial responsibility.
Representative James J. Florio, a New Jersey Democrat who was a prime sponsor of the asbestos act, plans to introduce such a provision this spring as part of a bill extending the law to all public buildings. A similar bill was introduced last fall but died in committee.
Under the proposed provision, asbestos consultants and contractors could guarantee their responsibility by obtaining insurance or by posting bonds or other forms of assurance.
In a related development, Mr. Florio and Representaive Mike Synar, Democrat of Oklahoma, sent a letter last month to the epa asking the agency to verify data collecttwo private firms that indicated that only about 40 percent of schools met the October deadline for submitting containment plans.
The agency is expected to release its official compliance data later this month. Governors were required to submit such information for their states to the epa by Dec. 31.