Information on pollution legal liability insurance including costs, coverages & options. This form of commercial insurance helps cover the environmental risks for property owners, operators or buying and/or selling a site or facility.
Pollution Legal Liability Insurance
A good place to start is define what a pollutant is. Pollution means the discharge, dispersal, release, escape, migration, or seepage of any solid, liquid, gaseous or thermal, material matter, irritant or contaminant, including smoke, soot, vapors, fumes, acids, alkalis, chemicals, hazardous substances, hazardous materials, or waste materials, on, in, into, or upon land and structures thereupon, the atmosphere, surface water or groundwater.
Many insurance policies offer coverage for the majority of liability issues, however, under very specific situations, coverage is left out or minimalized. Businesses that are susceptible to high pollution risks may need to consider another policy to purchase.
Pollution legal liability insurance (PLL) concerns the difficulties that may present themselves. This type of environmental policy is an added security for a business owner, especially if they have just purchased or sold an older building, facility some land.
Unfortunately, heavy chemicals and other substances often rest under the soil and are not found until a later date. PLL insurance covers these surprises.
Pollution Risks For Business
Following are some scenarios that environmental pollution legal liability insurance can help your business with, no matter how long it takes to clean up:
Environmental pollution issues are very expensive to remediate, can severely damage a business reputation and are likely to get worse as time passes (think Erin Brockovich where the groundwater in Hinkley, CA is seriously contaminated with carcinogenic hexavalent chromium).
Many business think their general liability policy covers pollution claims. This is not true as pollution is almost always excluded from the CGL. Pollution usually happened slowly over time, often underground and undetected for years. If the pollution contaminates a water source like a well, reservoir or river, the financial liability could be in the millions or more to clean up.
The United States Environmental Protection Agency (EPA) and other regulators are very powerful. They can shut you down fast... and if they think your business has caused the pollution, it's on you to prove you didn't. Guilty until proven innocent. You will have to hire environmental specialists to defend yourself. And the regulations of today might not be the same when the pollution is discovered.
If you cause an environmental incident it's not as easy as writing a check - then business as usual. If you've damaged a protected or endangered species or habitat, you're responsible for restoring it back to its 'original condition' which can a very long time.
If you damage the local environment and you'll get a lot of publicity, and contrary to the cliche - not all publicity is good. Environmental insurance shows the business has thought about its responsibilities before any pollution happened. It helps get the mess cleaned up can also offer public relations support to contain the reputational damage that usually occurs.
Your business could contaminate someone else's property. The costs go beyond just the clean up. You can be held liable for any injuries, property damage, their loss of use and business interruption. The of course there's the costs of cleaning up your own property and your own business interruption costs while it's being remediated.
Your businesses executives and management can also be exposed. Individuals can be prosecuted for environmental offences and there are penalties that include prison. Environmental insurance covers defense costs and settlements.
In the event of a pollution claim, having access to environmental experts is foundational to managing the loss. Professionals know the best ways to handle a particular incident using a variety of ways to lessen the long term impact, and helps manage the incident effectively.
Example Classes Of Business That Need PLL
You don't have to in a high risk industry to need environmental insurance. Pollution can arise from many different sources:
- Automobile Repair Services
- Building Operators (Commercial or Residential)
- Commercial Warehousing
- Contractors (see contractors pollution liability)
- Food Packaging and Warehousing
- Food Processing and Packaging Facilities
- Hospitals and other Medical Facilities
- Lending institutions and portfolio management
- Light Manufacturing
- Manufacturing and Industrial facilities
- Merger & Acquisition Activity
- Municipalities and Other Public Entities
- Oil & Gas Related Facilities
- Plant Nurseries
- Power Generation Facilities
- Real Estate Ownership, Property Management & Development
- Recycling & Waste Handling
- Refrigeration Storage Services
- Schools, Universities and Other Educational Institutions
- Storage and Distribution Facilities
- Transportation Facilities
- Truck and Car Rental Services
- Wholesale Businesses
Pollution Insurance Coverages
Following are some of main issues pollution legal liability insurance covers:
Loss Of Income
Loss of income can occur for a variety of reasons. An injury or illness does not have to occur for a job site to be out of commission. A building that presents with uninhabitable pollution must be evacuated. It can take time to secure an investigation and remedy the problem. Things like mold and lead can take time to remedy.
A business may not be able to run or receive profits until the insurance agency assesses the problem and approves the repairs. These repairs can take several weeks to months to fix. Loss of income during this time could easily put a small business owner into financial distress. Insurance should alleviate the concern about monetary stability.
Health problems are usually covered under the pollution legal liability insurance policy. You may find that the two are basically a part of each other and work together to makes sure that every detail of a situation is funded properly. Health problems that are directly related to the contamination of the business site, and not out on a job, should be reported to your broker.
Contamination of land or the building may not always be present at first site. Complications can also come up later if a plant builds near you, as well. Brown water waste areas are a common issue for new businesses. Land contamination could also mean the air around the building. Any pollution in or around your place of business that stems from the environment is cause for concern and should be covered under your pollution legal liability insurance policy. Pollution from cars can even be included.
Environments change often and your place of business may fall prey to some environmental complications at a later date. It is important to alert your insurance representative whenever something changes, so your policy can be updated to include all possibilities.
Perhaps your building stood alone for many years and new businesses and highways are being added. There may be new risks to your environment at this point. When you acquire a care insurance policy, you provide an updated description of your car. A business works the same way.
A proper inspection of your property or facility should be done and documentation provided. Many inspectors do structural checks on buildings before they are leased or purchased. Environmental tests can be run to evaluate the soil and air quality. This can help to show the condition of the property prior to any problems. If proof of environment is not available, it could affect the amount of your pollution legal liability insurance coverage in the event of a problem.
There may be some cases where the environment is damaged bad enough to cause a business owner to relocate or rebuild. Contamination that is known to cause ongoing health issues and cannot be cleaned up should be avoided. If employees and clients are unable to visit the area safely, it is time to talk to your broker about declaring a total loss of the property. This may be a rare occasion, however, so ask your agent about this possible scenario when signing your policy.
Pollution Legal Liability Insurance - The Bottom Line
We hope this article on pollution legal liability insurance has been informative. PLL insurance is a great tool for ensuring the security of a business site. There are many different environmental complications that can occur upon purchase, and over time. A good policy is all-inclusive of these possibilities. Regular inspections and updates of your building and land can help to minimize the possibility of contamination from some contaminates. Some pollution, however, cannot be avoided and may not be safe. Continued exposure should never be necessary, as your insurance policy is set up to cover environmental concerns.