Pollution Liability Insurance

Entities that have risks related to the handling of pollutants and hazardous materials, design profesionals who work with projects where there are environmental issues as well as those who own and occupy premises that have environmental issues need Pollution Liability Insurance. They include:

• Property owners and tenants whose buildings and land have a history of having pollutants on the property or premises. An example of a risk that would need Environmental Liability Insurance is a building on land that had an underground storage tank that leaked fuel oil before it was removed, contaminating the soil.

• Contractors such as roofers who handle pollutants like tar as a part of their operations need Contractors Pollution Liability Insurance to manage the risk of their causing damage resulting from a pollution incident.

• Architects and Engineers who are involved in projects which have issues related to pollutants need to add Pollution Liability to their Errors and Omissions Insurance to manage the risk of making a mistake regarding the presence or absence of pollution issues as they plan and execute a project.

Sudden and accidental pollution coverage refers to when a claim is reported and discovered. In order for the pollution event to be covered it needs to be reported as soon as possible. It will then cover boldily injury and property damage caused by the pollution spill.

If you are worried about a pollution incident happening at a specific location, you should have site pollution coverage. This will apply to shopping centers, manufacturing plants, and even a contractor’s storage area.

Pollution Liability Insurance coverages are designed to handle related losses to the business carrying the insurance policy (1st Party) and/or losses caused by the business to others (3rd Party).

First party: First party property losses are addressed by Premises Pollution Liability policies which are designed to protect insureds from pollution losses related to property that they own, rent or occupy. Environmental Liability Insurance is coverage for legal fees and judgments arising from third party claims of damage caused by pollution from the business.

Third party: Two types of policies cover third party liability pollution losses:

1. Contractors Pollution Liability coverage provides both indemnity protection and defense of claims in which a pollution incident is alleged to be the fault of an entity engaged in building, developing and general contracting.

1. Pollution coverage added to Errors and Omissions insurance for Architects and Engineers can protect them from allegations of a pollution related loss caused by their work. Pollution liability insurance for truckers is also important when taking into account the hazardous materials many truckers haul throughout the country.

A business umbrella policy covers legal fees, injuries to third parties (not your workers), pollution liability claims, and other expenditures that exceed the underlying insurance limitations.

Pollution Liability Insurance covers both first and third-party harm caused by pollutants emitted as a result of your business's operations, however some plans solely cover third-party claims.

Limits on Pollution Liability Insurance policies are generally greater than limits afforded on General Liability Policies. This is because instead of defense costs being in addition to the limits of a policy (like a General Liability or Auto Liability policy) these costs are included in the limit of a policy. There can be both a per occurrence and an aggregate limit in the policy (Example: a Policy can have a $2 Million per occurrence limit and a $4 Million aggregate limit.)

These policies also contain a self insured retention. This means that before the policy affords coverage, the insured is responsible for a set amount of defense and indemnity costs.

For example, unfounded allegations that a contractor was responsible for a pollution event that resulted in contamination resulted in $25,000 in defense costs being incurred The policy has a self insured retention of $10,000. The insured will pay the first $10,000 of defense costs and the insurance company will pay the remaining $15,000.

Intentional Acts Intentional Acts are not covered by Pollution Liability insurance, as well as, any type of war and terrorism.

Failure to Maintain Insurance This happens when the contract specifies a minimum limit of insurance the contractor must maintain, but the contractor fails to procure sufficient limits.

Asbestos However, in some circumstances, the policy can be endorsed to provide coverage.

Contractual Liability If the insured has a contractual obligation to provide coverage, it is not covered. However if there is liability absent the contract, or the contract is an, “insured contract,” such as a lease of a premises, the loss is covered.

Employers Liability It is covered by Worker Compensation, Employer Liability, Employment Practices Liability or Employee Benefits Liability depending on the facts and circumstances.

Worker Compensation An employee's injuries are covered by the employer's worker compensation policy.

Product Liability Product Liability is not covered by Pollution Liability insurance, as well as failure to maintain insurance (the contract specifies a minimum limit of insurance the contractor must maintain, but the contractor fails to procure sufficient limits).

Vehicles and non-owned storage facilities An auto operates using pollutants and there is specific coverage for pollutant clean-up and removal of these pollutants. In addition to that, any contamination of a storage facility (by disposing hazardous materials), not owned by an insurer, is not covered by Pollution Liability insurance.

Named Insured vs Named Insured This happens when one contractor named under a policy sues another contractor covered by the same policy.

Your Business If you are involved in any kind of event that causes pollution to the environment such as a chemical spill, oil and gas leaks, or other unintentional hazardous material release that is a part of your business operations, Environmental Impairment Liability will protect your business.

Your Suppliers Having agreements with suppliers means someone else to indemnify if something happens on your watch. For example, if you are hauling a product for a supplier and have a spill, they could be brought into the lawsuit as well and your policy would provide coverage first, per your agreement.