Have you considered pollution liability?
When one thinks about pollution, what comes to mind? Oil spills, chemical spills, smog, dirty air and water. While all of those are very visible signs of pollution, what is considered a pollutant may be a surprise. A simple internet search will reveal all kinds of definitions that certainly point back to natural assumptions about what is a pollutant. The National Geographic Society defines pollution as “the introduction of harmful materials into the environment. These harmful materials are called pollutants. Pollutants can be natural, such as volcanic ash. They can also be created by human activity, such as trash or runoff produced by factories.”
If one simply takes the above perceptions and definitions as the standard for what pollution and pollutants are, then one might incorrectly assume they have no pollution exposure or risk. Chris Bunbury, an environmental strategist and founder of Environmental Risk Managers, defines pollution as “A material, substance, liquid or product introduced into an environment for other than its intended use or purpose.” The definition provided by Chris Bunbury is most closely aligned with the definition insurance carriers use when determining whether there is coverage for an incident or not. Taking this second definition into account, one can easily see why nearly everything could be considered a pollutant. One should also understand that pollution is largely excluded by most commercial general liability and commercial umbrella and excess policies. This means that if a business has what could be defined as a pollution event by most insurance carriers, then that business may be left holding the bag when it comes time to pay for damages… and the damages can be very costly.
What can a business do to protect themselves from pollution liability claims or contractual provisions requiring Environmental Indemnification? Businesses have many products available to them, but two of the most common pollution policies are Site Pollution Policies, which cover the business for pollution incidents that occur on property they own, lease or manage. Contractor’s Pollution Liability Policies cover the business for the pollution exposures that may arise out of the business’ operations. Site Pollution policies are purchased by insureds who understand that they may have environmental exposures/risks, that could give rise to a pollution claim, on property they occupy. Contractor’s Pollution Liability Policies are often purchased by insureds who are trying to fulfill a contract requirement or a governmental mandate. It is important to note that the absence of either a contract requirement or a governmental mandate does not mean the insured is immune to pollution claims. This is why the best practice for insureds to follow is purchasing pollution policies that address each insured’s specific needs.
For a copy of our recent webinar on Pollution Liability please email feedback@dimondbros.com or reach out to your local Dimond Bros. agent to discuss.