When Do You Need Pollution Liability Insurance?

PollutionDid you know that roughly every construction or commercial type of business has at least one environmental liability exposure? Pollution liability does not happen as frequently as you think, but when it does happen, it is large, expensive and complicated. That’s why if you own a business that can have an effect on polluting the environment, due to operations, negligence, or inventory, it is important to have the proper coverage.

What Is Pollution Insurance?

Pollution Insurance is a type of coverage created specifically to manage costs associated with pollution clean-up, as well as covering pollution liability claims related to injury or deaths. This insurance was created in response to the problem that liability claims were bankrupting companies, and the victims were not being compensated. This insurance used to be included in most BOP’s, but that changed in the 1970’s with the event of many asbestos claims.

Any business that uses environmentally unsafe chemicals runs the risk of claims brought against them for pollution. These businesses include hair salons, garages, junkyards, manufacturers, and contractors. Contractors must purchase a special policy called contractors pollution liability that meets the needs of the construction industry. If they use materials that are later found to be hazardous, the contractors are liable for the damages. This provides coverage to contractors against claims of bodily harm or injuries and legal fees.

What Does Pollution Insurance Cover?

This policy covers any type of pollution that causes contamination of air, water, and properties that end up causing harmful effects to people. Many policies will even cover pollution that occurred in the past before the harmful effects of waste-products were known.

Most of these coverage options listed come with a standard pollution policy, but some companies may require you to purchase additional endorsements:

  1. Legal fees: Insurance companies can provide you with an attorney specialized in these matters and can also cover the costs of other legal fees and court costs.
  2. Clean-up efforts: If your company must, by law, clean up the disaster and contaminants, this will compensate for a portion of the costs. You may also be able to purchase stop-loss policies that limit the responsibility of your company.
  3. Property transfer: Protects property owners if they purchase property (land or building) that was polluted by the previous owner. Also, will cover necessary clean up.
  4. Errors: For clean-up companies that wrongly declare land or buildings free of contamination and pollution.
  5. Catastrophic coverage: Provides coverage if there is a sudden event such as a fire or explosion.
  6. Non-catastrophic coverage: If pollution occurs over an extended period of time and affects neighboring residents of businesses.

Businesses face new and historical environmental exposures that can damage the health of staff and bystanders, properties, land, buildings, and company reputations. They can be sudden or gradually occur over a period of time. Businesses, especially yours, should not risk being poorly protected against claims and environmental threats. To hear how environmental liability coverage works, you can read more about it here: Why Your Business Needs Pollution and Environmental Liability. At TJ Woods, our experts know exactly what kind of policy would best suit the type of business you are in. Contact us today!