1. Environmental Impairment (Pollution) Insurance
L’Oreal USA, Inc.

2. Pollution Insurance Objective:
Explain how environmental insurance works to protect L’Oreal’s interests:
Pollution Event
Insurance Policy Terms & Conditions:
Basic Coverage Explanation
Key Exclusions
Claim discovery and reporting requirements

3. What is Considered a Pollution Event?
Gradual or sudden discharge, dispersal, release, or escape of any:
Solid, liquid, gaseous or thermal irritant, contaminant or pollutant
Including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste
Into or upon land, or any structure on land, the atmosphere, or any watercourse or body of water, including ground water

4. L’Oreal’s Environmental Insurance Coverage
Zurich North American Insurance Company
Policy Number: EPC
Policy Term: 1/16/2009 – 1/16/2014
Limit of Liability
$5 Million each pollution event
$10 Million policy (5 years) aggregate limit
Deductible - $25,000
All L’Oreal named locations
90 Days to report new owned or leased locations

5. Pollution Application
Reliance upon insurance application:
Description of surrounding environment
Historical use of each location
Environmental reports
Type of raw materials used in manufacturing
Effluent treatment and discharge
Reported underground storage tanks
Air emissions
Methods of disposal
Previous environmental issues

6. What’s Insured?
Clean-up Costs
Legal Liability

7. What’s Insured? Clean-up Costs On-Site and Off-Site
(Including non-owned locations and transportation of materials)
Required by governmental authority
Reasonable and necessary cost of removal and remediation
Business interruption expenses
Legally obligated to pay (off site)
Example: Storage tank or runoff from fighting fire seeps into ground and further contaminates groundwater under facility.

8. What’s Insured? Pollution Legal Liability On site and off site
(Including non-owned disposal sites, divested locations and transportation of materials)
Bodily Injury and Property Damage
Including fungus / spores
Limited Lead and Asbestos coverage (for third-party bodily injury only)
Legal Expenses / duty to defend
Example: A gradual discharge of contaminants leaks into neighbors property. Neighbor sues for clean-up and alleged bodily injuries.

9. Key Policy Exclusions
Knowingly wrongful acts or deliberate non-compliance with government mandates
Unreported underground storage tanks
Upgrades or maintenance without physical pollution event
Fines, penalties and punitive damages
Employee injuries
Covered by Workers’ Compensation Insurance

10. Key Definitions Bodily Injury Property Damage Clean-up Costs
Physical injury, sickness, disease, mental anguish or emotional distress sustained by any person, including death
Property Damage
Physical injury to or destruction of tangible property, including loss of use
Clean-up Costs
Reasonable and necessary costs incurred in the investigation, removal, remediation, neutralization (and monitoring) of contaminated soil, surface or ground water

11. Key Policy Conditions Cooperation with insurer
Do not admit liability without written consent of the insurance company
Environmental events discovered and reported during the policy period.
By a responsible insured in amounts or concentrations that exceed allowable levels established under governmental authority
A responsible insured is an officer, member of management, employee with responsibility for compliance, environmental or legal affairs, or risk management

12. Notification of Potential Claims
Notify Insurance or Regulatory Affairs
New pollution events that are reasonably expected to result in a claim
Provide written notice to the insurer containing particulars sufficient to identify the:
Cause of the pollution event
Time, place and location
When first aware of event
Known third-parties impacted
Investigative or engineering reports

13. Clark 2006 Claim Experience
Release from alcohol storage tank on November 10, 2006
Underground pipes corroded and cracks in concrete vault allowed alcohol to seep into soil
UST and connections identified on insurance policy application
Reported to insurer within the policy period
Results of ground water monitoring
DEP and environmental consultants reports
Actual invoices for expenses
Estimated clean-up expenses $400K
Estimated legal expenses $100K
Claim recovery still unknown, but expected to be settled by mid-2009

14. Environmental Impairment Liability (EIL) Summary
L’Oreal has insurance coverage for a gradual, or sudden and accidental pollution event
Zurich Insurance Company $5MM / $10MM
Clean-up costs, legal liability and legal expenses
Coverage for on or off site, and transit
90 days to report new locations
Claims have to be reported during the policy period
Better to advise Regulatory Affairs or Insurance, even if uncertain, before the insurance policy expires

15. Questions or Comments