Borrowers contemplating the purchase of insurance to cover the costs of pollution cleanup should examine the policies carefully to make sure the coverage is worth the premiums, warned Margaret V. Hathaway, partner in the Washington office of the law firm of Thacher Proffitt & Wood.

Hathaway, a leading figure in the effort to limit lender liability in pollution cleanup cases, said purchasers of such policies should particularly examine how much of the cleanup cost may be deductible from the coverage and whether the coverage applies only to pollution that occurred when the policy was in effect. Most problems arise from cases where the pollution occurs before a developer has purchased a site and is not discovered until development has begun or even has been completed, she explained.

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