Imagine the following scenario: Your business produces paint for commercial applications. Unfortunately, due to an earthquake, there’s a spillage of some of the waste materials. It affects the ground, water and air close to your plant — including land that belongs to a neighboring business. Of course, you’re responsible for remediating the pollution on your own land. But you’re also liable for cleaning up your neighbor’s property. Moreover, you need a way to pay for all of this remediation work without breaking the bank. That could be a problem.
If your business uses hazardous materials, or if it produces them either as a final product or as a byproduct of the manufacturing process, there’s always a risk that an accident, natural disaster or human error could cause a spill or leak that results in environmental damage. So how can you protect yourself?
Environmental Liability Insurance
Until the 1980s, general liability policies covered environmental liability. At that time, more and more insurance companies started issuing separate policies for it, and today, general liability simply doesn’t offer any coverage in the event of toxic contamination.
Fortunately, you can now purchase environmental liability insurance. This is also referred to as pollution coverage or pollution insurance. It covers the exposure that generally liability policies exclude.
As the National Association of Insurance Commissioners points out, the severity and frequency of environmental claims are increasing — predominantly due to the rise in natural disasters such as earthquakes, mudslides, and floods. For this reason, it’s becoming increasingly important to ensure you’re protected.
According to the Insurance Information Institute, environmental impairment liability insurance covers liability and property loss due to pollution-related damages for previously uncontaminated sites. It covers legal expenses, bodily injury, property damage, statutory clean-up requirements, and business interruption losses up to a predetermined limit. Moreover, it offers coverage for both gradual and sudden or accidental contamination.
There are also other forms of environmental liability insurance, including:
- Environmental contractor policies for remediation contractors
- Environment consultants’ errors and omissions
- Environmental testing laboratory coverage
In addition, there are also environmental liability policies that protect real estate agents and lenders in the event they’re involved in transactions regarding property that later is shown to be contaminated.
How to Purchase Environmental Liability Insurance
If your company could in any way be held liable for environmental contamination, it’s advisable to purchase environmental liability insurance. The best way to go about this is to schedule an appointment with your trusted commercial insurance broker. He or she can explain exactly what different types of coverage there are, help you calculate how much coverage you need and assist you in selecting the best possible policy for your situation. For more information, please contact Grand Mutual Insurance today.
