What You Need to Know about Pollution and Environmental Liability Insurance

Traditional Commercial General Liability Insurance policies do not cover pollution and environmental hazards.  An environmental insurance policy does and can be tailored to your specific business and its risks. Environmental Insurance policies can be customized to cover pollution liability, environmental professional liability, contractors’ liability, transporter insurance and storage tank pollution liability. Environmental impairment liability insurance can be used as a tool to assure lenders supporting the purchase or development of property, or to assure potential purchasers of your company that unknown conditions are covered. With the right pollution coverage, you are protected against environmental claims, including pollution abatement, cleanup costs, and claims of bodily injury or property damage.

Pollution and environmental liability insurance isn’t just for oil companies and nuclear plants. As we learn more about the environment and the effects of commercial businesses, restrictions will likely increase and your responsibilities will continue to grow. Pollution insurance can protect your business in two important ways:

• First-party coverage provides you with funding if you have a spill or contamination requiring extensive cleanup. This might be necessary if any chemical used in your business leaks into the ground on your property. Your first-party environmental liability policy would fund the cleanup effort.
• Third-party coverage protects you from allegations that a release of a pollutant from your facility adversely affected others. If this pollution affects others by contaminating the public water or air supply, third-party coverage would protect you. For example, if the refrigeration unit at your meat processing plant has an ammonia leak, contaminates the air, and requires residents from the surrounding community to evacuate, your policy would pay for resulting costs and any damages arising from lawsuits. Third-party pollution insurance coverage could also protect you if your product causes pollution while it’s being transported by a third party, such as a railroad.

Which businesses should have environmental insurance coverage?

A wide range of businesses can benefit from pollution and environmental liability insurance, including commercial property owners, developers, and agribusinesses. Entities that should strongly consider pollution insurance include:

• Manufacturing and processing companies
• Healthcare entities (particularly hospitals)
• Municipalities
• Agribusinesses
• Developers
• General and Artisan contractors
• Remediation contractors
• Disposal and recycling facilities
• Businesses with aboveground or underground storage tanks