This competitive environmental intelligence is for golf course/resort owners/operators to assist in understanding the environmental issues that may impact your operations and potential risk transfer strategies

Common environmental exposures faced by golf courses/resorts include: Over application of fertilizers, herbicides, pesticides; improper storage of batteries and raw materials/chemicals/fuels/lubricants/anti-freeze; leaking underground or above ground storage tanks; vandalism; no storage tank management programs; natural resource damages; equipment storage areas where oils and other contaminants percolate into the soil; gradual contamination to soil, ground water, surface waters; bodily injury to neighboring residents; storm water runoff contamination; absence of comprehensive and coordinated spill control plans; uncertainties about the historical use and conditions on the property; historical waste disposal practices; contamination from neighboring properties; improper onsite waste storage; no auditing of waste handling and disposal companies; use of fill materials which contain unknown contaminants; possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire; air emissions from onsite refrigeration systems; sick building syndrome in golf course club house and/or other structures; 55 gallon drums stored in unsecured areas with no secondary containment; old septic systems; nuisance odors; spills and leaks from the storage and handling (loading/unloading) of material containers such as drums, totes or bags from vehicles; corroded wastewater and storm water sewers; failure or overflow from on site waste water treatment facilities; failure of backup generator for waste water treatment facilities; easements/utilities that cross the property that may leak or spill hazardous materials; hazardous materials from adjacent roads or railways due to truck or train accidents; old, abandoned wells which are not properly closed and serve as an open conduit for soil and ground water contamination; improper management of protected or sensitive areas such as wetlands; excavation through and spreading of unknown pre-existing contaminated soil; impacting ground water from drilling and excavation work; impacting underground utility lines/services or other underground structures; spills from portable above ground storage tanks; overuse of irrigation; siltation of nearby streams and other bodies of water from improper erosion control management.

Environmental Liability Claims for Golf Courses/Resorts

1. The concrete secondary containment of a 10,000-gallon gasoline aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The gasoline seeped into the underlying soils and required costly excavation and removal. The total cost for investigation and remediation exceeded $220,000.

2. A residential community located adjacent to a golf course received its water supply from groundwater wells. Over time, the application of herbicides and pesticides to the golf course caused groundwater contamination. Bodily injury claims were filed by local residents for perceived injuries from drinking contaminated water. Property damage claims were filed because the groundwater system was no longer a suitable drinking source. Total claims exceeded $700,000.

3. A golf course stored gasoline in steel underground storage tanks (UST’s) for use in tractors, lawn mowers and golf carts. Tank corrosion led to a discharge of petroleum products, which contaminated the surrounding soil and groundwater. Remediation expenses incurred for the investigation and cleanup of the site amounted to $350,000.

4. A golf course sent all of its waste golf cart batteries to an off-site facility for disposal. Over a period of several years, the facility did not adhere to applicable federal and state environmental regulations, and the golf course was found jointly liable for pollution conditions caused by the battery disposal facility. The settlement for cleanup exceeded $175,000.

5. A golf course was being constructed on a former municipal landfill. During construction, a subsurface methane gas vent pipe collapsed. The collapsed pipe caused a dangerous build up of methane in the neighboring residential community. Neighbors were forced to evacuate their homes, and they submitted bodily injury, property damage, loss of value and trespass claims against the course owners in excess of $1,000,000.

6. A convention taking place at a golf resort was disrupted and forced to relocate because of the odor from an onsite wastewater treatment plant. A suit in the amount of $100,000 was filed against the golf resort for loss of enjoyment and for costs to relocate the convention.

7. During excavation for a foundation, an unknown underground storage tank containing oil was ruptured. Hundreds of gallons poured out before the rupture was closed. Since the excavator did not have contractors pollution liability coverage, the golf resort owner/developer had to pay for remediation costs in excess of $80,000.

8. A country club hired an electrical contractor to upgrade the main club house electrical system. During trenching operations, a backhoe hit a natural gas pipeline causing an explosion. Third parties filed bodily injury claims against the contractor, as well as the country club whose club house was destroyed in the explosion. Claims exceeded $4.5 million.

9. A golf course used treated waste water as a source for irrigation. The waste water treatment plant did not comply with permitting regulations nor was the wastewater tested prior to releasing it to the golf course. After several months of irrigation, heavy metals and high counts of fecal coliform were found in the soils. The golf course was required to pay remediation costs in excess of $265,000.

Risk Transfer Strategies

Most golf courses/resorts lack the financial strength to self insure their environmental liabilities. Consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy. Environmental insurance is a means of financing a loss.

Consider the three main benefits environmental liability insurance affords:

1. Coverage includes defense cost. Environmental liabilities are relatively new and very litigious. Even if you do nothing wrong you can still get named in a suit and have to expense defense dollars to get released.
2. All policies come with experts to assist you in handling an environmental claim. Anytime you can have the EPA, state and local environmental officials along with the press pounding on your door, this is not a fender bender, you need experts to assist you in running damage control central.
3. The majority of the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption. You need to look at your customers and neighbors that can be impacted should an environmental loss occur. Who can you impact should you or a sub-contactor/vendor cause an environmental liability?

PAR (Pollution And Remediation)

Golf courses/resorts are susceptible to economic loss caused by pollution that actually or allegedly originated from their operations. PAR is for those who own, operate, lease, or have any other insurable interest in real property and the golf course operations. PAR can be written in a variety of ways to address environmental liabilities for third party bodily injury, property damage and business interruption, on and off site clean up costs, under ground and above ground storage tanks, legal defense expenses, and more.

PROPERTY TRANSFER COVERAGE

When buying or selling property their can be unknown preexisting environmental conditions. Since environmental due diligence (All Appropriate Inquiry (AAI), Phase I or Phase II survey, Baseline Environmental Assessment (BEA)….), cannot guarantee uncovering all potential environmental liabilities, property transfer insurance has been created. This coverage protects the new owner or any party with an insurable interest, against unknown environmental conditions that may be discovered during the policy period, that were not caused by the new owner.

This coverage not only helps to keep the property at its maximum value, it will assist the purchaser in being able to secure the necessary financing to complete their transaction. Golf course/resort owners and developers who use this product as part of their risk transfer strategy often find they can negotiate with the seller to share the cost and negotiate a better mortgage rate than if they did not have property transfer coverage. You can cover multiple locations on a single policy.

UNDERGROUND GROUND STORAGE TANKS

Storage tank financial responsibility requirements ensure that owners/operators of underground storage tank systems have the ability to financially handle a release from the tank system. The responsibility encompasses the ability to pay funds for corrective action and third party bodily injury and property damage from non-sudden and sudden and accidental releases from a regulated underground tank system.

Golf course/resort owners with a financial responsibility strategy dependent upon state UST funds need to regularly confirm fund solvency and length of time it will take to get reimbursed. If part of your business strategy depends upon the state fund, this means just that, you are putting the future success of your business in the hands of the state. You need to strategize on “just how strong is your business” if you are putting its future in the hands of your state government.

Note: For golf course owners/operators, you have potential indirect environmental exposures from the service vendors you hire and products you purchase. Should your vendors cause an environmental problem or exacerbate an existing environmental issue their general liability insurance policy probably will have either an absolute or total pollution exclusion.

How do you receive your raw materials? Do you purchase the materials FOB point of shipment? If you do, when your raw materials leave the shipping dock you are the owner. What is your strategy if there is an accident while in transit to your golf course/resort and your raw materials cause a pollution loss?

CONTRACTORS POLLUTION LIABILITY (CPL)

CPL coverage can be purchased to meet two specific exposures. First, contractors that perform remedial activities (asbestos, lead, mold, soil or ground water remediation) there is the standard contractors pollution liability (CPL) insurance coverage. This protects the insured for pollution conditions they may cause or exacerbate while performing remedial services. This is for covered operations performed by or on behalf of the insured. The loss must occur away from any premises the insured owns, rents, leases or occupies, in other words while they are performing remedial services in the field.

Secondly, standard contractors (i.e. general contractors, HVAC, plumbing, electrical, mechanical, janitorial, demolition, drilling, excavation, street and paving contractors, rigging, utility, artisan, etc.), in performing their services may cause an environmental liability that is generally excluded from their general liability coverage. For these contractors there is contingent contractors pollution liability (CCPL) coverage. Basically they are afforded the same coverage as remedial contractors but the cost to purchase this insurance is substantially less.

TRANSPORTATION POLLUTION LIABILITY

Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of their cargo. Broadened auto pollution liability (typically Form CA 9948) affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo.

PROFESSIONAL LIABILITY (E&O)

E&O insurance protects a golf course/resort owner/operator should an environmental engineer/consultant make and error or omission in performing their professional services. The standard commercial general liability policy excludes coverage for professional services performed by engineers/consultants/surveyors….