What Does Pollution Legal Liability Insurance Cover?
Pollution and environmental concerns are growing exposures for many businesses, but many people wonder what pollution insurance covers.
The short answer is simple: pollution insurance, also known as environmental insurance, is available to protect companies from the risk of legal liability and unexpected abatement costs resulting from discovering environmental liabilities. There are countless possible pollutants, environmental conditions and contaminants in any building or property, and more could be discovered at any time. Many claims that insurance companies classify as pollution-related are ones that you may think would be covered under your standard commercial general liability (CGL) policy but are not. These include emergency response costs, third-party bodily injury, and business interruption.
History Of Pollution Insurance For Your Business
Pollution insurance for your business dates back to the mid-to late-1980s and has evolved since then to keep pace with changing trends, new exposures, and greater coverage needs. The first pollution legal liability insurance policies covered third-party claims for bodily injury, property damage, and clean-up cost claims that resulted from the offsite release of environmental contaminants from the insured’s property. Though better than nothing, these policies had several shortcomings: they didn’t cover any claims resulting in on-site contamination, and they didn’t cover any first-party clean-up costs.
The early 1990s brought expansions to pollution policies as they began covering claims for on-site contaminant releases and first-party clean-up costs due to newly discovered environmental damage. Most carriers limited this first-party coverage to clean-up costs that the site owner was legally obligated to pay, such as staying in compliance with local, provincial or federal standards.
In addition, newer pollution policies cover site owners for the entire lifespan of a property—from “cradle to grave” (as long as the owner has coverage throughout this period). This lifespan begins when the property is acquired, lasts throughout its useful purpose and ends when the property is abandoned or sold—because the property owner could be liable for environmental risks during any phase of its lifespan.
Many recent pollution policies also include previously known exposures, such as asbestos, lead-based paint or specific contaminant levels that were previously below legal standards. Such known exposures used to be widely excluded.
Pollution Insurance For Your Business Today
Several types of pollution liability coverage for your business operations are currently available, and most policies are customizable to fit a company’s unique risks and exposures. They often offer ancillary coverage options, too, such as premises pollution liability insurance, environmental impairment liability insurance, and transportation pollution liability insurance during the transportation of goods.
What Pollutants Can Pollution Insurance For Your Business Cover?
The following are just a sampling of possible pollution exposures that may affect your company:
- Chinese drywall (defective drywall containing unsafe levels of sulphur that has been released into the air)
- Toxic mould, fungus or other bacterial contamination
- Silt runoff from construction sites into public water sources (liability for both contractor and property owner)
- Certain green construction techniques that cause unforeseen pollutants
- Nanotechnology
- Asbestos
- Lead-based paint
- Any contaminants or chemicals that could be released into the air or public water supply (this list could be endless, including solvents, degreasers, paints, cleaning products, fuels, pesticides, herbicides, etc.)
- Aboveground or underground storage tanks
- Improper waste disposal (including medical waste)
- Building or car exhaust/fumes
- Malfunctioning of HVAC or ventilation equipment
- Malfunctioning, crumbling or leaking of older buildings and pipes, causing contamination
To discuss what pollution insurance covers for your business, contact one of our many licensed Canadian commercial insurance brokers today by calling 1-866-287-0448. To get a free pollution insurance quote for your business, visit our get a quote page to get started.
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