Pollution liability insurance—is it right for your company?

If you’re a small business owner, you may not have thought about pollution liability yet. Maybe you don’t work with obviously hazardous material. Or maybe you thought hazardous waste incidents were covered under one of your other insurance policies. We're here to help you decide if pollution liability insurance is right for your company.

It’s a good idea to double check what kind of insurance you need and why. You don’t want to find out only after a costly clean up and owe thousands or hundreds of thousands of dollars. Some contracts may even require you to have pollution liability. Keep reading to find out more about this type of insurance and how it could help you!

What is pollution liability insurance?

Pollution liability insurance gives businesses protection from claims or costs that arise because of pollutants that their business uses, handles, produces or exacerbates. Sometimes, small business owners think that just because they’re not hauling or storing hazardous waste, they don’t need to worry about pollution liability insurance.

A pollutant can be anything that can escape, be released, or dispersed into the environment. In other words, the pollutant may not be obvious. If you’re transporting oranges, and an accident occurs and a ton of oranges go all over the road, into a farmer’s field, and into storm water drain, that’s a pollutant you’ll need to pay to clean up. Or let’s say you’re a boutique vintage clothing store. You do some renovating of your store space and your worker cuts through an old wall, spraying dust with mold-contaminated drywall throughout your store, which soon gets into the vents and circulates to the other retail spaces in the building. Those are both perfectly normal examples of pollution.

So, a pollution liability policy will help you narrow down what your risks are so that in the event of an incident, your pollution insurance can kick in and cover the costs.

There are different kinds of pollution liability:

Transporter Insurance:

This kind of pollution insurance specifically addresses incidents that happen during transportation. This kind of insurance makes sense if you are hauling any kind of item or substance because, as mentioned before, one accident can cause a lot of mess. This is usually part of a standard pollution liability insurance policy—but double check with your insurance agent to be sure.

Storage Tank Pollution Liability:

If your company stores hazardous material, this specific pollution coverage will address bodily injury and property damage if there’s a leak, breach or incident.  

Pollution Legal Liability:

Policies like these cover legal ramifications. Whether the pollution is on-site or off-site, if someone got hurt, there were cleanup costs, or if there was property damage, legal liability insurance can help offset the costs of lawsuits. This kind of liability coverage is appropriate for companies.

Professional and Contractor Environmental Liability:

This kind of policy address legal problems, too, but it is specific to individual contractors. Contractors' pollution liability allows your insurance to focus in and cover you when you need it.

Ask your insurance agent about what you need in your pollution liability policy to cover your company’s unique situation.

Does General Liability insurance cover pollution?

It used to. Before the 1980s, general liability did cover pollution. Now, however, we have a better grasp on how harmful pollution can be, how damaging it is, and we’ve seen that cleanup costs can cost millions. Nowadays, most general liability policies include an “absolute pollution exclusion,” which means any incident connected to hazardous waste or pollution is not covered.

Environmental cleanup projects can be large-scale events that require specialists and time. Or they can be small events that still require experts. When you’re prepared to deal with a potential environmental risk, your business can recover from the incident faster with pollution insurance.

 

What does pollution liability insurance cover?

Pollution liability insurance covers claims like:

Bodily injury

You are doing a demonstration on the effectiveness of your pool cleaning chemicals for the public, but someone gets burned by a too high concentration. You’ll need to pay for the bodily injury your product caused.

Property Damage

Your landscaping company is doing their monthly spray & weed for a set of commercial buildings. The tank of pesticide gets tipped over, and decimates the soil and plants right by the front door. Your company may get sued, or your client may just expect you to clean up and replace the damaged area.

Business Interruption

You own a commercial property and are doing some renovations. Your contractor finds asbestos in the walls. You need to shut down the store front you’ve leased next door as well as your own business while experts remove all the asbestos. Your business and another person’s business is interrupted.

Crisis Management

Your company is shipping tanks of oil when one of your ships runs aground. The resulting oil spill requires a large-scale effort to control and mitigate the damage. You must hire and bring in a team who are experts in environmental cleanup projects to assess the damage and determine the right course of action as soon as possible.

Transportation Liability

You have just pumped out a client’s sewage tank. Your transport system springs a leak and your truck leaks sewage five miles until the driver notices.

Clean Up Costs

You’re using a forklift to move crates of small plastic pieces from the area they were made to the warehouse where they get packaged and shipped out, but the forklift fails, the crates tip over, and thousands of small plastic pieces are now dumped all over the parking lot. Your employees can’t safely move their cars. You’ll need to spend time and money cleaning up.

Pollution insurance is there to help you manage incidents like these.

Who needs pollution liability?

If you work with hazardous waste materials, you must anticipate an incident. The environmental risks posed by whatever hazardous materials you work with are too great to toy with. If you work with anything that can be spilled, released or that can escape, you need to anticipate that material doing so and creating a toxic situation.

Because some companies work directly with hazardous waste material and others don’t, annual premiums for pollution liability insurance varies widely. Your company may do most of its work online and therefor need to focus more on cyber security threats than pollution. Your insurance agent may still remind you that the building you work out of is old, and the possibility of mold or asbestos is high. In that case, they might still advise you to get pollution liability.

 

Ultimately

The risk of hazardous waste exposure or pollution conditions is never zero. Your clients, employees or partners may have environmental concerns that pollution liability policies can help with.

Montgomery insurance agents will be able to go through your company, your work, and the potential risks to help you decide what kind of insurance you need.

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