Author: Kara Bunbury

  • How are your client’s buying their raw materials?

    Environmental Strategist between the lines: The majority of transportation pollution losses occur during the loading and unloading process, see the link below.

    It’s also important to understand how your clients are buying their raw materials, FOB (freight on Board) point of shipment or FOB point of delivery? The majority of businesses buy their raw materials FOB point of shipment. Why? Because it’s cheaper. FOB point of shipment means the purchaser is responsible for the cargo once it leaves the loading dock.

    This leads to asking the purchaser what their financial assurance plan is should there be an accident in route and their cargo released to the environment?

    Transportation pollution liability insurance protects the insured for pollution losses of their transported cargo during the loading, unloading and transportation of their cargo being shipped over road, rail, air or water.

    https://dailygazette.com/article/2018/05/03/lawsuit-filed-in-asphalt-explosion-death

  • ERMI on Contractors Operating Facilities

    Continuing with our environmental risk management series for contractors, you will find attached an environmental Risk Assessment (eRA) for pollution exposures impacting Contractors Operating Facilities.

    So often we strategize on the pollution exposures impacting contractors while operating in the field but what about their office / shop / equipment storage… operations that support their in the field work?  The attached eRA will coach you on the exposures impacting your contracting insureds operating facilities.

    We’ve developed eRA’s for over 80+ classes of business to get you and your clients on the same page about the environmental exposures impacting their operations.  We send our eRA’s in a Word format, so you can cut and paste them into a marketing presentation that compliments your agencies marketing program.

    Our partner agencies find utilizing the eRA’s is an excellent way to leverage their insurance sales through educating the client about the fiscal realities of pollution protection.  It genuinely does have a measurable impact to their bottom line and strategic financial planning.

    The eRA’s come in three parts:

    1. Review of environmental exposure impacting your insured.
    2. Environmental loss examples
    3. Environmental insurance coverage’s that are appropriate for the insured to consider.

    The goal is to educate your insured, so they can make the best decisions for their business. If your insured sees value and elects to further pursue environmental insurance coverage, we’re here to make your job easier by utilizing our network and expertise to market your client’s submission and supply you with the best coverage options.

    I want to share with you an email I received from one of our retail agency partners regarding his experience using ERMI eRA’s.

    Email from agent:  All I had to do at the P&C pre-renewal meeting was hand him over your HVAC claims example piece for consideration.  I had his app in my email inbox before I returned to the office.

    ERMI, so much more than a wholesaler, we are your TEAM member for all things environmental.

    Contractors Operating Facilities eRA

    The pollution exposures impacting your contracting work in the field are well documented, but have you considered the pollution risks impacting your owned, rented or leased operating locations?

    Many contractors have physical locations that support their work in the field, which can include offices, storage buildings, equipment/vehicle maintenance facilities, fuel storage, outdoor storage yards, raw materials, etc.

    Depending on the activities taking place at your operating facility(s), environmental exposures impacting your location(s) can include, but are not limited to;

    • Storage of bulk materials such as adhesives, stains, fuel, etc. which can be hazardous in the event of severe weather, fire, or faulty work.
    • Storm water run-off from machinery and/or materials stored outdoors on the property, & employee parking lots.
    • Underground ground & above ground storage tanks, totes, barrels, drums, etc.
    • Unknown contamination from historical property uses
    • Storage of waste oils, anti-freeze, batteries, hydraulic fluid, etc.
    • Illegal dumping of waste by 3rd parties (midnight dumping)
    • Vandalism creating a pollution liability
    • Pollutants from neighboring properties migrating onto your property
    • Mold, asbestos, silica, lead, etc.
    • Impacting underground utilities
    • Nuisance odors from batch plants, idling equipment, etc.
    • Loading and unloading products/materials over unsealed or cracked surfaces
    • Devaluation of property value due to a buyer’s uncertainty concerning possible present contamination

    Environmental Loss Examples

    1. While moving a large piece of equipment at a contractor’s storage facility, the forklift operator hit an aboveground storage tank releasing 10,000 gallons onto the ground that migrated onto neighboring properties before emergency response crews could respond. Area businesses and residents were evacuated.  Claims for bodily injury, cleanup, property damage… exceeded $400,000.
    2. During the night an unknown party illegally placed drums of hazardous liquid into a dumpster at a drilling contractor’s equipment storage facility. The containers were not leaking, but the cost to properly dispose of the hazardous liquid cost the drilling contractor roughly $50,000.
    3. A trucking contractor’s vehicle wash bay experienced a release from the piping system, causing a substantial amount of cleaning solvents to enter the surrounding soil and ground water.  Cost to remediate the cleaning solvents from the soil and ground water was in excess of $250,000.
    4. A construction management company was remodeling and expanding their home office. During the project, the excavation contractor hired to prepare the site for the expansion excavated through and ruptured an unmarked gas line. The excavation contractor was liable for cleanup costs and business interruption expenses, which totaled over $300,000. Due to the size of the loss, the excavation contractor was forced out of business, leaving the construction management company (property owner) to cover the costs.
    5. A HVAC contractor was hired to upgrade the heating system at a construction management company’s office. While working in the building, the HVAC contractor failed to vent the system properly, causing a release of carbon monoxide. Employees at the office began complaining of headaches and nausea, and were rushed to the local hospital. As a result, several bodily injury suits were filed against the construction management company (property owner of the office building) in excess of $1,000,000.
    6. The concrete secondary containment of a 10,000-gallon aboveground diesel storage tank located at a contractor’s office/storage facility cracked. The release from the tank spilled 8,000 gallons into the containment area of the tank. Over the weekend diesel fuel seeped into the underlying soils. Total cost for investigation, removal, and disposal exceeded $320,000.
    7. A contractor routinely stored barrels of fuel, oil, anti-freeze, paint thinners, and other solvents at their outdoor storage yard. While loading about 1,000 pounds of potentially hazardous products onto a truck, five barrels slipped off the fork lift releasing the contents. Fortunately, the contracting company had an emergency response plan in place and their emergency response team was able to contain most of the contaminants.  Cost of the additional cleanup was $70,000.

    Insurance Product Solution

    Environmental Impairment Liability (EIL)

    Sometimes referred to as Pollution Legal Liability, EIL is for contractors that own, rent, lease, or occupy a property, which is susceptible to economic loss caused by pollution that actually, or allegedly originated from their location, or migrates onto their location from a neighboring property.

    EIL Policies Can Provide Coverage for

    • New pollution conditions and/or unknown preexisting conditions
    • Third party bodily injury & property damage
    • on and off site clean-up costs
    • 3rd and/or 1st party business interruption
    • Legal defense expenses
    • Above ground storage tanks
    • Non-Owned Disposal Site Liability
    • Transportation Pollution Liability
    • Can be included with Contractors Pollution Liability on a package policy
    • Blanket coverage for insureds with multiple locations

    Policy Terms, Limits, & Premiums

    • Minimum premiums start at $2,000 for $1M/$1M limits
    • $5,000 minimum deductible
    • Up to $25M in limits available
    • Multi-year terms available up to 10-years

  • ERMI on Masonry Contractors

    Continuing with our environmental risk management series for contractors, you will find attached an environmental Risk Assessment (eRA) for Excavators.

    I want to share with you an email I received from one of our retail agency partners regarding his experience using ERMI eRA’s.

    Email from agent:  All I had to do at the P&C pre-renewal meeting was hand him over your HVAC claims example piece for consideration.  I had his app in my email inbox before I returned to the office.

    We’ve developed eRA’s for over 80+ classes of business to get you and your clients on the same page about the environmental exposures impacting their operations.  We send our eRA’s in a Word format, so you can cut and paste them into a marketing presentation that compliments your agencies marketing program.

    Our partner agencies find utilizing the eRA’s is an excellent way to leverage their insurance sales through educating the client about the fiscal realities of pollution protection.  It genuinely does have a measurable impact to their bottom line and strategic financial planning.

    The eRA’s come in three parts:

    1. Review of environmental exposure impacting your insured.
    2. Environmental loss examples
    3. Environmental insurance coverage’s that are appropriate for the insured to consider.

    The goal is to educate your insured, so they can make the best decisions for their business. If your insured sees value and elects to further pursue environmental insurance coverage, we’re here to make your job easier by utilizing our network and expertise to market your client’s submission and supply you with the best coverage options.

    ENVIRONMENTAL RISK ASSESSMENT (eRA)

    What is a Pollutant?

    Any material, substance, liquid, product, etc… which is introduced into an environment for other than its intended use / purpose. Fresh water, cheese, and milk have all been classified as pollutants by Insurance Carriers under various circumstances.

    Many non-environmental contractors assume that claims arising from operations are covered by the general liability policy. However, claims resulting from a “pollution incident” are excluded from most general liability policies, which leaves many of these contractors exposed to potentially uncovered claims. What pollutants are impacting your business?

    Environmental Exposures Impacting Concrete & Masonry Contractors

    Include, but are not limited to: Storm water runoff;  Mold;  Transportation of raw materials;  Silica;  Asbestos; Natural resource damages;  Storage of raw materials;  Illegal disposal of waste by 3rd parties at jobsites (midnight dumping);  Release of oils/fuels from equipment;  Spills from mobile storage tanks;  Exacerbating preexisting contaminated material;  Puncturing underground utilities or storage tanks;  Ground water contamination;

    Environmental Claim Scenarios

    1. While transporting material to a job site, a concrete contractor got into an accident which caused most for the material to enter a nearby stream. Remediation costs, and natural resource damage claims totaled over $250,000.
    2. During the construction of a parking garage below a structure, silica dust migrated up an elevator shaft and disbursed throughout all floors of the building.  It was determined that inadequate dust barriers were what allowed the silica to infiltrate the shaft. The liable concrete contractor filed a claim with their GL carrier for the resulting property damage and bodily injury, but its insurer denied the claim, due to the policy’s pollution exclusion. The contractor was ultimately responsible for coving 100% of the loss.
    3. While setting up concrete forms at a commercial property, a concrete contractor accidentally drove a rebar stake through an unmarked underground fuel line. The leak was not detected until later in the day, allowing hundreds of gallons of fuel to flow into the soil. The contractor filed a claim that his insurance denied due to the pollution exclusion.
    4. A concrete contractor unknowingly spread petroleum-contaminated soil across a project site during fill operations at a project site. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations the contractor was eventually removed from the lawsuit. However, they incurred $90,000 in defense costs.
    5. A masonry contractor, performing a renovation project at a historic building, was sued by employees of a nearby office building who asserted that they were exposed to silica dust coming from the job site. The claimants reported damages for bodily injury, declaring that required measures were not taken to prevent or minimize dust emission during the project.
    6. A concrete contractor laid an undercoat of slag while working at a commercial property. After the runway was completed, it was discovered that the slag was contaminated and was leaching pollutants into a tributary of one of the Great Lakes. The claim exceeded $400,000.
    7. During construction activities, a crane that was used to lift concrete barriers overturned. The accident ruptured the crane’s hydraulic hoses, spilling all its fluid onto the ground. The contractor was required to pay clean-up costs from the spill.

    Overlooked Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting Concrete & Masonry Contractors, pollution losses are not a frequency risk, but rather a severity risk. Because all Concrete & Masonry Contractors have notable environmental exposures, consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy, versus self-insurance.

    Furthermore, most commercial insureds only consider the remediation costs associated with a pollution event. However, often times the clean-up costs are far less than other costs that can arise from the loss.

    Overlooked Benefits of environmental liability insurance;

    1. Defense Costs: 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 costs i.e. legal fees, environmental investigations, etc.
    2. Claim Management:  All policies come with specialists to assist you in handling a claim.  Who is in charge of communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability: 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 client’s and neighbors that can be impacted if you or a sub-contractor/vendor cause an environmental loss.

    Environmental Liability Insurance Coverages

    Contractors Pollution Liability (CPL)

    Contractors Pollution Liability (CPL) insurance protects the insured should they cause or exacerbate an environmental condition while performing their contractor services.  CPL protects the insured for covered operations performed by or on behalf of the insured, while operating away from any premises they own, rent, lease or occupy.

    CPL can be offered on a claims made or occurrence basis.  Coverage can be written on a job specific basis, or on a blanket basis to cover all the work performed by the insured.  Most policies can be endorsed to cover transportation pollution liability.

    Contractors incorporating CPL coverage as part of their risk transfer strategy, drive their growth and profits by marketing the benefits CPL coverage affords in reducing job interruption due to environmental issues.

    Transportation Pollution Liability

    Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of transported cargo. Transportation pollution liability affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo.

    Environmental Impairment Liability (EIL)

    EIL is for contractors that own, rent, lease, operate or have any other insurable interest in real property (a fixed site facility such as a shop, batch plants, cement manufacturing/mixing plant….) that can be susceptible to pollution liabilities that actually or allegedly originated from the insured property.

    Coverage can include: Pre-existing unknown pollution, new pollution conditions, first party on-site clean up, third party bodily injury, property damage, business interruption and extra expense, off site cleanup costs, legal defense expenses, transportation pollution liability, offsite disposal coverage….  Multi year term policies can be negotiated.

    Incidental Professional Liability

    Professional exposures are generally excluded from General Liability and monoline Contractors Pollution Liability policies. In the course of their normal operations, contractors face all types of professional exposures. They may make slight adjustments on the provided plans to get the job done properly, they may supervise subcontractors, or provide other recommendations which could potentially be questioned in the event of a claim. In the event of a professional claim, will your insurance provide coverage?

    ERMI, so much more than a wholesaler, we are your TEAM member for all things environmental!

  • TEAMing with Accountants to Drive Insurance Sales

    Offering assurance on a client’s financial position is the foundation of an Accounts business model.  The Accounting profession offers various levels of assurance from an Audited financial statement, Reviewed or Compilation.

    After going through their defined process, Accounts offer an opinion whether the financial statements are accurate and free of material misstatements.  The Accountants work is designed to enhance the degree of confidence regarding a client’s financial position.

    Government regulation has and continues to have, a huge impact upon the Accounting profession.  Environmental government regulations such as SOX, SAB 92 Ruling, FIN 47, GASB 49…, can have major impacts on an Accountant’s work.  Make a mistake and an Accountants E&O can take a hit.

    Not only must accountants attest to the fairness and accuracy of recorded environmental exposures, but they must be aware of possible unknown environmental liabilities.  As environmental exposures and related costs grow in dollar size and public awareness, Accounting Professionals must be prepared, in some cases required, to incorporate environmental impacts into financial reports and decisions.

    In today’s transparent business environment, the problem created by a traditional Accountant’s work, is not making sure there is a financial assurance mechanism in place to backstop potential environmental liabilities.  One environmental liability can render an Account’s work not worth the paper it’s written on unless there is an environmental financial assurance mechanism.

    As more accountants understand the environmental financial assurance gap not addressed in their work, I am sure most will make environmental financial assurance part of every Audit, Review or Compilation.

    The correlation to this is the transformation banks made to their business model in the 1990’s, once they understood how environmental due diligence granted them the Lender Liability Defense for collateralized properties.  It took numerous times where a client’s environmental problem became a banks environmental problem, before banks woke up to the reality of the environmental gap created by their lending practices.

    Just to make sure we are on the same page, Environmental Financial Assurance is nothing new, it’s been around for decades.  Under Federal law, regulated Underground Storage Tanks Owners must evidence financial assurance to put fuel in their tanks.  Industrial and hazardous waste haulers must evidence financial assurance before they can move one load of waste.  Asbestos and lead abatement contractors must evidence financial assurance before they can remediate asbestos or lead.  Landfills must evidence financial assurance before they can accept any waste….

    There are various forms of environmental financial assurance, i.e. Bond, Letter of Credit, Insurance, Monies in Escrow, Captive, Risk Retention Group….

    As with banks, Accountants have learned, when it comes to environmental liabilities, a client’s environmental problem can become the Accountants problem.  As part of “Best Practices”, Accountants must incorporate coaching their clients on the value an environmental financial assurance mechanism (Bond, Letter of Credit, Environmental Insurance, Monies in Escrow…) adds to their business model.

    Environmental financial assurance mechanisms also help to reduce the reputational risk associated with environmental liabilities while protecting the Accountants bottom line.

    In today’s transparent business environment, Accountants must have a working knowledge of managing and transferring their client’s environmental exposures as part of “Best Practices” or face prosecution, reputational risks and / or extinction.  I can remember when there were the “Big 8” Accounting firms.

    Environmental Coaching Tips For Adding Accountants To Your TEAM

    1. What is a “Pollutant”?  You need to make sure Accountants have a clear understanding of what a “Pollutant” is.  If you look at an environmental indemnification in a contract, it generally describes a Pollutant as smoke, vapors, soot, fumes, acids….  However, due to the way courts and insurance companies have responded to lawsuits and insurance claims, environmental Strategist™ (eS) has developed a definition that is easier to understand.  eS define a “Pollutant” as a material, substance or product that gets introduced to an environment for other than its intended use or purpose.” In other words, something that ends up where it does not belong can be a Pollutant.  eS have examples where fresh water, milk, cheese, fruit, beer and more have all been defined as a “Pollutant”.
    2. Every business is impacted by environmental exposures.
    3. Environmental liabilities tend to be a severity versus frequency issue.
    4. Environmental Accounting is one of the fastest growing fields in the Accounting profession. This is partly due to Government regulations.  Environmental accounting attempts to assure that current accounting methods are not contributing to or offering misleading signals.  e.  Is a business’s success achieved at the expense of the environment or does the success of a business make a net contribution to the betterment of our environment?  Environmental accounting looks to balance or at least upgrade the dangers caused by current accounting methods and reduce misleading signals in their Accounting profession.

    A correlation to this is the Federal Government coming out with “All Appropriate Inquiry”, to upgrade the ASTM Phase I, II… site assessments.  We must remember; environmental issues are relatively new to business and society, so we must expect as we grow and learn more, that change is inevitable.  As I like to say, “Change is the only constant, in the environmental industry”.

    ERMI TEAM building strategy:  Start by working with Environmental Accountants or Accounting firms that incorporate environmental accounting because they are coached up on the value environmental financial assurance offers their client’s.  Like most business professionals, Accountants like to work with client’s that can pay their accounting bill.  My experience is, most Accounts are not aware of the various environmental insurance products available and the financial assurances they afford.

    1. When it comes to environmental liability insurance as a financial assurance mechanism, three often overlooked benefits offered in policies are:
    2. Defense Costs: Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong, you can still get named in a suit and must expense legal fees.  Environmental insurance policies cover defense costs.
    3. Claim Management: All policies come with specialists to assist you in handling a claim.  Who’s in charge of communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    4. Third Party Liabilities: 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.

    Environmental Liability Insurance For Accountants To Coach Their Client’s

    Since every business is impacted by environmental exposures, consideration needs to be given to the economies of scale afforded with environmental liability insurance, versus other financial assurance instruments or self-insuring.

    Environmental Impairment Liability (EIL)

    EIL is site pollution coverage for property owners susceptible to economic loss caused by pollution that actually or allegedly originated from scheduled properties of the insured.  Sometimes referred to as Pollution Legal Liability (PLL), this coverage is for those who own, operate, lease, or have any other insurable interest in real property and/or the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions.  Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off-site cleanup costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multiyear terms.  Most EIL policies cover above ground storage tanks up to a certain size.  Scheduled Underground Storage Tanks can be covered on EIL policies.  You can cover multiple locations on a single policy.

    Property Transfer Coverage

    When buying or selling property there can be unknown preexisting environmental conditions. Since environmental due diligence (Phase I, Phase II…), cannot guarantee uncovering all potential environmental liabilities, insurance companies have created property transfer insurance. 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.  You can cover multiple locations on a single policy.  Coverage is generally written on a multi-year term (i.e. 3, 5, 7… years).

    Mergers, Acquisitions & Pollution Protection (MAPP)

    Key to any acquisition is the correct valuation and effective due diligence and MAPP operates as a backstop against issues due diligence or valuation processes may not be able to identify.

    As a financial assurance mechanism for M&A’s, pollution liability insurance has become part of “Best Practices”.  Representation & Warranties (R&W) insurance is proving its value for M&A’s much the same as pollution liability insurance has.

    R&W insurance is designed expressly to provide insurance coverage for the breach of a representation or a warranty contained in a Buy / Sell Agreement, in addition to or as a replacement for all or most of the seller’s contractual representations and warranties.

    MAPP delivers a cost-effective way to transfer R&W and pollution liabilities to a financially stable third party.

    Brownfield Redevelopment Insurance

    Today, more than ever, Federal, State and local governments are creating incentives for redevelopment of Brownfield sites. These are properties that due to actual or perceived contamination are sitting idle or underutilized. Through Brownfield redevelopment these properties can be cleaned up and put back on the tax rolls.

    The basic purpose of this insurance is to protect the owners, purchaser or investors against known or unknown environmental conditions. Brownfield redevelopment insurance can be structured in a variety of ways. Besides the financial assurance mechanism, contractor’s pollution liability, transportation, off-site disposal, cost cap insurance, post remediation coverage and much more can be addressed. The important thing to remember about Brownfield redevelopment coverage is that it is customized for each project.

    Contractors Pollution Liability (CPL)

    Contractors Pollution Liability (CPL) insurance protects the insured should they cause or exacerbate an environmental condition while performing their contractor services.  CPL protects the insured for covered operations performed by or on behalf of the insured, while operating away from any premises they own, rent, lease or occupy.

    CPL can be offered on claims made or occurrence basis.  Coverage can be written on a job specific basis, blanket basis to cover all the work performed by the insured or Owner Controlled.  Most policies can be endorsed to cover transportation pollution liability, mold, lead, and asbestos, defense outside the limits, off-site disposal coverage, and more. Contractors incorporating CPL coverage as part of their risk transfer strategy, drive their growth and profits by marketing the benefits CPL coverage affords in reducing job interruption due to environmental issues.  A major environmental liability exposure faced by all contactors lies in who they are doing business with.  If there is an environmental loss at a job site, innocent contractors can and do get named in lawsuits.  Do your subs/vendors have CPL insurance if they cause an environmental loss?

    Home Depot, Wal-Mart and many more, have paid multimillion dollar fines for contractors they hired that caused environmental liabilities.  They now require CPL for contractors doing work for them to avoid paying on liabilities created by their vendor contractors.

    Professional Liability

    The absolute pollution exclusion in a standard commercial general liability policy excludes sudden and accidental, and gradual pollution losses due to the release of “solid, liquid, gaseous, or thermal irritants or contaminants, including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste”….  Engineering firms who work in solving environmental exposures faced by their clients need to have coverage for negligent acts, errors or omissions that may result in damages caused by pollution conditions.

    There are various ways coverage can be written to protect the engineering firm and their clients. Professional liability on a standalone basis or professional liability including general liability (GL) is available. For engineering firms that may also get involved in doing hands on work at the job site, they can add to the coverage contractors pollution liability (CPL) insurance, (refer to contractors pollution liability insurance for more details). Coverage for the professional liability is done on a claims made basis. For the GL and CPL, coverage can be on a claims made or occurrence form basis.

    You have to also keep in mind there are contractors that in the performance of their work may act in a consultants or engineers capacity. You need to make sure you offer your client the broadest program available to meet their business model.

    Transportation Pollution Liability (TPL)

    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.  Make sure you do not confuse the MCS-90 endorsement as being TPL coverage, it is not and the insurance carrier reserves the right to subrogate back against the insured for cost to clean up a release of the transported cargo.

    Coaching up Accountants how pollution insurance can protect their client’s, while better protecting their E&O and bottom line, will drive the sales of your insurance products.

  • TEAMing with Attorney’s To Drive Insurance Sales

    Of all the “business professionals” (i.e. attorney’s, accountant’s, banker’s, realtor’s, environmental engineers) we are highlighting in the ERMI TEAMing with “Business Professionals” series, attorneys represent the lowest hanging fruit for insurance professionals to TEAM with.

    There are several reasons for this which we will cover in this competitive environmental intelligence but mainly, attorneys tend to specialize in specific areas of law, i.e. general business, estate planning, bankruptcy, patent / trademark, environmental, criminal, international, employee, civil…  This means an attorney is well versed in their specific area of law but possess very little knowledge about assisting their clients to manage and transfer their environmental exposures.  Note:  As highlighted in Series #1, TEAMing With “Business Professionals”, every business and individual is impacted by environmental exposures.

    Historically, once an environmentally reactive business / individual calls their attorney to assist them with an environmental liability, the attorney brings in their firm’s environmental specialist to address the issue.  This business model will generally lead to some form of litigation and what attorney’s clients have learned over the years about environmental litigation is its very time consuming, stresses resources and desired results are generally not achieved

    Insurance professionals are not going to fix a broken business model overnight, but you can fill a huge gap in most attorney’s work, lack of financial assurance to backstop their legal documents.  In today’s business environment, the name of the game for attorney’s is avoid litigation to grow their client base and business.  Insurance professionals are armed with an arsenal of products to assist attorneys to grow their business model.

    The bottom line, today’s transparent business environment has changed the way Attorney’s must address environmental exposures impacting their client’s which means opportunity for insurance professionals.

    Note:  Education is a vital component to building a TEAM relationship with “Business Professionals”.  Throughout the ERMI “Business Professionals” series we will offer coaching tips to assist you in building your relationships with “Business Professionals”.

    ERMI TEAM Relationship Coaching Tip:  In some contracts, attorney’s will require financial assurance to backstop indemnifications contained in the contract.  They will generally achieve this utilizing standard property and casualty and environmental insurances with coverage being evidenced by a certificate of insurance.  The problem this strategy presents in relation to environmental insurance is, an environmental insurance policy will not be issued without the insurance carrier first receiving a completed and signed “warranty” insurance application.  In general terms the application will state that the environmental insurance policy is being issued based upon the signed “warranty” application and that the application will become part of the policy.  The application goes on to say at the time of a loss if it’s discovered the application is not accurate, the insurance carrier can deny coverage.  Without first confirming the “warranty” application is accurately filled out the certificate of insurance may not be worth the paper it is written on and the same is true for the attorney’s financial assurances contained in the contract.  Coaching attorneys to understand warranty applications will fill a gap in their financial assurance strategy in contracts and a gigantic hole in their E&O exposure.

    To support the above statements let’s look at another example.  For years, attorneys have utilized environmental indemnifications in real estate Buy / Sell Agreements, mergers and acquisitions and many other legal instruments.  Generally speaking, attorneys feel content with addressing potential environmental exposures by simply utilizing environmental indemnifications in legal instruments and not backing them up with a financial assurance mechanism (i.e. bond, letter of credit, monies on deposit, insurance).

    Today we know the problems created by this mindset and the fact that environmental indemnifications are a very cursory way of addressing environmental exposures in legal transactions.

    ERMI TEAM Relationship Coaching Tip:  Environmental insurance policies pay for defense costs.  Do you think an attorney would rather collect their fees from a financially solvent insurance carrier or a client that just found out they have contaminated half their towns drinking water?

    For decades, our Federal Government has utilized financial assurance requirements for asbestos and lead abatement contractors, regulated underground storage tanks, hazardous & industrial waste haulers, Landfills…, so why not more attorney’s?

    Insurance professionals have a variety of financial assurance products to assist attorneys to reduce their E&O exposure, one of which is pollution liability insurance.  TEAMing with ERMI will allow you access to the full menu of the environmental insurance products offered by the major environmental insurance carriers.

    ERMI TEAM Coaching Tip:  Talking points with attorney’s.

    To understand why “Best Practices” for attorneys means moving beyond their current litigious business model to possessing a working knowledge of managing and transferring environmental exposures, we first must be on the same page about a few environmental facts.

    1. What is a “Pollutant”? If you look at an environmental indemnification in a contract, it generally describes a Pollutant as smoke, vapors, soot, fumes, acids…..  However, due to the way courts and insurance companies have responded to lawsuits and insurance claims, environmental Strategist™ (eS) has developed a definition that is easier to understand.  eS define a “Pollutant” as a material, substance or product that gets introduced to an environment for other than its intended use or purpose.” In other words, something that ends up where it does not belong can be a pollutant.  eS have examples where fresh water, milk, cheese, fruit, beer and more have all been defined as a “Pollutant”.
    2. Law firms generally utilize specially trained environmental attorney’s to address their client’s environmental exposures when in reality their biggest environmental exposures are with their other legal specialist’s i.e. general business, health, international, labor, estate planning, merger & acquisition, real estate…. In short, nearly every attorney must possess a working knowledge of proactively addressing their client’s environmental exposures.  TEAMing with ERMI insurance professionals can do this.  In short, you become the law firms backroom environmental risk manager on managing and transferring their client’s environmental exposures.
    3. Historically, attorneys have made their money by addressing past environmental problems such as asbestos, lead, mold and so much more. This reactive approach has cost attorneys time, resources, client relationships and much more.  TEAMing with ERMI we can coach attorney’s on proactively managing and transferring their client’s environmental exposures to increase productivity and profits while reducing their E&O exposure.
    4. The inability of at fault parties to meet environmental indemnifications in contracts is a reputational and liability risk for attorney’s. Attorneys not practicing environmental “Best Practices” may find their E&O insurance at risk of claims from disgruntled client’s.

    ERMI TEAM Coaching Tip:  You would be amazed how many contracts Environmental Risk Managers (ERMI) reviews that an attorney constructed requiring the wrong pollution insurance.  On almost a weekly basis ERMI will assist an attorney with correcting their contract to make sure the proper pollution insurance is being requested and put into place.  TEAMing with ERMI we can make sure your legal TEAM members are not opening themselves up to an E&O exposure by requesting the improper environmental insurance.

    Today’s business environment is demanding attorneys know if their work is preserving an asset or creating an environmental liability for their client and themselves.  Insurance professionals TEAMing with attorney’s to manage and transfer the attorney’s clients environmental exposures will position themselves as a trusted advisor and strategic partner while driving the sales of their insurance products.

    In Environmental Risk Managers “Business Professionals” Series #3 we will strategize on TEAM building with Bankers / Financial Institutions.

  • Legionella Update

    environmental Strategist between the lines:  In the last couple of years I have sent out more articles on Legionella than any other environmental subject.  Why, because after years of monitoring Legionella the amount of attention focusing on this pollutant has increased dramatically.

    As you will see in the links below, there are a variety of sources for Legionella and it impacts a wide spectrum of your insureds.

    Studies have shown that 40 to 60% of cooling towers have tested positive for Legionella.

    These articles will assist you to coach up your insureds on better managing and transferring their Legionella exposure.

    Don’t Be a Case Study for Legionella

    http://www.newequipment.com/plant-operations/don-t-be-case-study-legionella

    Kentucky women died from Legionnaires disease contracted at Graceland Hotel

    https://www.commercialappeal.com/story/news/2017/09/12/woman-died-legionnaires-disease-contracted-guest-house-graceland-hotel/656986001/

  • TEAMing with Bankers to Drive Insurance Sales

    For decades, Bankers have utilized environmental indemnifications in their loan documents as protection from environmental liabilities. Then in the mid 1990’s Phase I / II… environmental site assessments were added as another layer of defense for a Bankers lender liability exposure on real estate transactions.

    In basic terms, environmental indemnifications and Phase I’s have been used as a way for all concerned parties to feel content with addressing potential environmental exposures on financial transactions.

    Today, we know the problems created by this mindset and the fact that environmental indemnifications and Phase I’s are a very cursory way of addressing environmental exposures. Especially when you consider that environmental liabilities tend to be a severity vs frequency issue.

    As countless Banks have experienced, when it comes to environmental liabilities, a client’s environmental problem can become the Banks problem. That’s why it’s crucial for banks to have a financial assurance mechanism (Bond, Letter of Credit, Environmental Insurance, Monies in Escrow…) in place to backstop the inability of a borrower to meet environmental indemnifications.


    Environmental financial assurance mechanisms also help to reduce the reputational risk associated with environmental liabilities for Banks.
    When it comes to environmental liability insurance as a financial assurance mechanism, three often overlooked benefits offered in environmental liability insurance policies are:
    1. Defense Costs: Environmental liabilities are relatively new and very litigious. Even if you do nothing wrong, you can still get named in a suit and must expense legal fees. Environmental insurance policies cover defense costs.
    2. Claim Management: All policies come with specialists to assist you in handling a claim. Who is in charge of communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liabilities: 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.

    Environmental Coaching Guide for Bank Professionals

    1. Bankers must first understand what a “Pollutant” is? If you look at a loan document, they generally describe a Pollutant as smoke, vapors, soot, fumes, acids…. However, due to the way our courts and insurance companies have responded to lawsuits and insurance claims, environmental Strategist® (eS) has developed the following simplified definition: a “Pollutant” is a material, substance or product that gets introduced to an environment for other than its intended use or purpose.” In other words, something that ends up where it does not belong can be a Pollutant. eS have examples where fresh water, milk, cheese, fruit, beer and more have all been defined as a “Pollutant”.
    2. Every commercial client a Bank works with is impacted by environmental exposures. What is their financial assurance mechanism?
    3. eS research has determined that fewer than 50% of Phase I Site Assessments are accurate. Also, environmental due diligence (Phase I, Phase II…) as part of meeting the innocent landowner or lender liability defense only protects the real estate owner or bank from the government. Impacted non-governmental third parties can still file suit.
    4. Banks, besides being cognizant of the environmental exposures impacting their collateralized properties, need to consider neighbors of collateralized properties. When a Phase I Site Assessment is conducted to investigate who neighbors are that could have contamination going onto a subject property, environmental engineers do a minimum of a 2-mile radius search. Third party contamination coming onto a bank collateralized property could impede the property owner’s ability to service their loan. Under Federal law the property owner is ultimately responsible for the environmental condition of their property regardless of who caused the contamination. Environmental insurance policies can protect property owners if third party contamination comes onto their property.
    5. What about bank loans for client’s that lease / rent their facility to third parties? Lease / rental agreements contain “environmental indemnifications”. What if a tenant experiences an environmental liability in the facility or a third-party vendor (HVAC contractor, Repairman, Landscapers…) contaminates the facility? Without a financial assurance mechanism in place, contracts that contain environmental indemnifications may not be worth the paper there written on.
    6. Additional environmental exposures impacting bank loans may include but are not limited to: Vapor intrusion, Storm water runoff, Natural resource damages, Easements that cross collateralized property, New construction & remodeling on collateralized properties, Sick building syndrome, Mold, Legionella….

    Bankers not proactively addressing environmental exposures may find their profits at risk when a borrower discovers they have an environmental liability. Coaching up Bankers how pollution insurance can protect them from the gaps created by environmental indemnifications in contracts and site assessments will drive the sales of your insurance products.

    Environmental Liability Insurance Coverages for Banks to Consider
    Simply due to their business model, every Bank is impacted by environmental exposures. Therefore, consideration needs to be given to the economies of scale afforded with environmental liability insurance versus self-insuring.

    Environmental Impairment Liability (EIL)

    EIL is for Banks susceptible to economic loss caused by pollution that actually or allegedly originated from owned or collateralized properties. Sometimes referred to as Pollution Legal Liability (PLL), this coverage is for those who own, operate, lease, or have any other insurable interest in real property and/or the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions. Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off-site cleanup costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multiyear terms. Most EIL policies cover above ground storage tanks up to a certain size. You can cover multiple locations on a single policy.

    Lender Liability Coverage (LLC) / Secured Creditor Coverage

    As so many Banks have learned, when it comes to environmental liabilities, a client’s environmental problem can become the Banks problem.
    To address the potential environmental liabilities faced by a Bank’s operations, there is a risk transfer product called Lender Liability Coverage (LLC). LLC enables Banks to shield assets by protecting collateral and insuring for environmental liabilities arising from collateral properties. LLC fills gaps created by traditional environmental indemnifications, due diligence….

    LLC provides collateral value protection in the event of a loan default and a newly discovered pollution event at the covered location/s. When this occurs, LLC can pay the lesser of the outstanding loan balance and extra expenses or the estimated cleanup costs. LLC can be used on a single transaction or on a portfolio basis. Coverage is offered on multiyear policies that can run up to the term to maturity of the insured loan. LLC offers the ability to assign interest to a successor lien holder. LLC allows Banks to be more competitive on loans they would once be forced to pass-up due to environmental uncertainties.

    Property Transfer Coverage

    When buying or selling property there can be unknown preexisting environmental conditions. Since environmental due diligence (Phase I, Phase II…), cannot guarantee uncovering all potential environmental liabilities, insurance companies have created property transfer insurance. 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. You can cover multiple locations on a single policy.

    Mergers, Acquisitions & Pollution Protection (MAPP)
    Key to any acquisition is the correct valuation and effective due diligence and MAPP operates as a backstop against issues due diligence or valuation processes may not be able to identify.
    As a financial assurance mechanism for M&A’s, pollution liability insurance has become part of “Best Practices”. Representation & Warranties (R&W) insurance is proving its value for M&A’s much the same as pollution liability insurance has.
    R&W insurance is designed expressly to provide insurance coverage for the breach of a representation or a warranty contained in a Buy / Sell Agreement, in addition to or as a replacement for all or most of the seller’s contractual representations and warranties.
    MAPP delivers a cost-effective way to transfer R&W and pollution liabilities to a financially stable third party.

    Brownfield Redevelopment Insurance

    Today, more than ever, Federal, State and local governments are creating incentives for redevelopment of Brownfield sites. These are properties that due to actual or perceived contamination are sitting idle or underutilized. Through Brownfield redevelopment these properties can be cleaned up and put back on the tax rolls.
    The basic purpose of this insurance is to protect the owners, purchaser or investors against known or unknown environmental conditions. Brownfield redevelopment insurance can be structured in a variety of ways. Besides the financial assurance mechanism, contractor’s pollution liability, transportation, off-site disposal, cost cap insurance, post remediation coverage and much more can be addressed. The important thing to remember about Brownfield redevelopment coverage is that it is customized for each project.

    eS Financial Assurance Strategy for Banks: Fire Insurance policies are required by Banks that hold mortgages on properties to protect their collateral from a loss due to fire. What happens after a fire? The water and chemicals used by the fire department along with charred, toxic remnants of real and personal property can create environmental liabilities. The fire department is immune from prosecution. Under Federal law the property owner is ultimately responsible for the environmental condition of their property and fire insurance policies offer negligible limits to address cleanup. Insureds that purchase fire insurance policies need a financial assurance mechanism to address the environmental liabilities created by a fire and pollution insurance is designed to fill this critical gap.

  • City Sues Firefighter Foam Makers Over Water Contamination

    environmental Strategist, between the lines:  In a past article, “Must Read For Insurance Professionals That Sell Commercial Fire Insurance Policies,” I strategize why insureds need a financial assurance plan before a fire occurs to address environmental liabilities caused by fires.   After a fire occurs, insured’s need monies to address the contamination left behind by the firefighters in putting out the fire along with charred, toxic remnants of real and personal property.

    Fire policies generally offer a token amount to address clean up after a fire.  The cleanup limit offered in a fire policy is substandard because the insurance carrier does not want to foot the bill for pollution liabilities that result due to a fire.  Environmental insurance plays a critical role in filling in this coverage gap created by fire policies.

    Offering substandard cleanup limits is the same strategy executed by standard property & casualty insurance carriers who offer “limited pollution coverage”.  The term “limited pollution coverage” is an oxymoron because the “limited pollution coverage”, limits the insurance carrier’s exposure to paying for a pollution claim and has a very tight window to discover and report a pollution claim for coverage to be in force.

    As the article below points out, adding fuel to the fire (pun intended), 3M, a manufacturer of firefighting foam is being sued because the suit claims, “the foam chemicals are persistent when released into the environment and harmful.”

    So if the lawsuit turns out to be true, firefighters are using known contaminants to put out a fire and yet fire departments are immune from environmental liabilities in the course of putting out a fire.

    What is your insured’s financial assurance strategy to address environmental liabilities after a fire?

    Fill out the attached application and ERMI will negotiate for environmental insurance to fill in the coverage gap for your insureds you sell fire policies to.

    https://whdh.com/news/city-suing-fighter-foam-makers-over-water-contamination/

  • Michael Jordan Owned Golf Course Pollutes St. Lucie River in Violation of Florida Rule

    Besides the obvious reputational risk associated with environmental liabilities, the deeper story for your High Net Worth Insureds is making sure they have a financial assurance strategy in place to protect themselves from environmental liabilities created by the vendors they hire.

    A few years ago, both Home Depot and Wal-Mart paid multi-million dollar fines for storm water runoff from their construction sites. Home Depot and Wal-Mart do not own construction companies, so the liabilities came to them from the vendors they hired to perform the construction. This is the same scenario now impacting Michael Jordan.

    After paying their multi-million dollar fines, Home Depot and Wal-Mart implemented a financial assurance strategy were as contractors must evidence proof of Contractors Pollution Liability insurance in force before they can begin work for either company. Wal-Mart has since taken it one step further where contractors can’t bid jobs without first evidencing Contractors Pollution Liability insurance being in place.

    If Home Depot and Wal-Mart feel a need to have a financial assurance strategy in place to protect their assets from the vendors they hire, why should it be any different for your High Net Worth insureds.

    Environmental Risk Manager, Inc. (ERMI) pollution liability insurance program for your High Net Worth insureds can protect them from pollution liabilities like Michel Jordan is facing and considerably more.

    Attached is an environmental Risk Assessment (eRA) for High Net Worth insureds. The eRA is designed to get you and your High Net Worth Insureds on the same page about the environmental exposures impacting their resources. We send our eRA’s in a Word format, so you can cut and paste it into a marketing presentation that compliments your agencies marketing program.

    ERMI partner agencies find utilizing the eRA’s is an excellent way to leverage their insurance sales through educating the client about the fiscal realities of pollution protection. It genuinely does have a measurable impact to their strategic financial planning.

    The eRA comes in three parts:

    1. Review of environmental exposure impacting your insured.
    2. Environmental loss examples
    3. Environmental insurance coverage’s that are appropriate for the insured to consider.

    The goal is to educate your High Net Worth insured’s, so they can make an informed decision if investing in the ERMI High Net Worth Pollution Insurance product will add value in protecting their resources.

    If your High Net Worth insured sees value and elects to further pursue environmental insurance coverage, ERMI’s TEAM of environmental Strategist® are here to assist you.

    Insurance professionals not discussing pollution exposures with their High Net Worth insured’s, may find their E&O insurance is the only coverage their insured may have when they experience an environmental liability.

    https://www.tcpalm.com/story/news/local/indian-river-lagoon/health/2018/02/02/construction-michael-jordan-owned-golf-course-polluting-south-fork-st-lucie-river/301580002/

  • Natural Disaster Seasons Are A Great Time To Talk Pollution Insurance

    2017 Set Record for Losses from Natural Disasters:  Insurers are set to pay out a record $135 billion to cover losses from natural disasters.

    As ERMI has coached in the past, Natural Disaster Seasons (NDS, i.e. Flooding, Tornados, Forest Fires, Hurricanes, earthquakes…) are a great time to talk pollution.  Did you know most pollution policies do not exclude Acts of God.

    During NDS, national and local media are lighting up the airways / internet highway with all the pollution problems caused by natural disasters.  You hear about storage tanks releasing their contents as debris crashes into them during flood season.  Pollutants spread out over miles from tornados or hurricanes.  Forest Fires engulfing communities and causing explosions that release pollutants in the air and the list goes on.

    Note:  Pollution losses tend to be a severity versus frequency issue.

    The Prospects you want to strategize with on the value pollution insurance adds to their business model during NDS are those that feel they do not have a pollution exposure.  For this example, let’s use real estate owners.  For sake of avoiding an argument, agree with the real estate owners they do not have a pollution exposure, but then ask, what if a natural disaster deposits pollutants onto your real estate?

    Note:  Under federal law, the real estate owner is ultimately responsible for the environmental condition of their property.

    It may not be until years later when the real estate owner goes to sell their property and an environmental site assessment unveils an environmental problem from pollutants deposited during NDS.  Whose responsible?

    Since every business is impacted by environmental exposures, it’s now part of “Best Practices” for businesses to have a financial assurance strategy in place to address their exposure to environmental liabilities caused by Natural Disasters.

    As your team member for all things environmental, let ERMI know how we can assist you to drive your sales during NDS.

    http://www.advisen.com/tools/fpnproc/news_detail3.php?list_id=1&email=chris@ermi.us&tpl=news_detail3.tpl&dp=P&ad_scale=1&rid=300316308&adp=P&hkg=v17ZNLMWEU