Blog

  • ERMI Business Professional Series Realtors

    Licensed Real Estate Professionals have a duty to perform their services with a level of care which is established by contract and prevailing standards of conduct in their field.  The fact is, Realtors have professional duties to disclose material facts of which encompass environmental exposures / liabilities.

    Today’s, transparent business environment, means real estate professionals must be aware of the evolution of their E&O liability loss exposures.  Claims under E&O often include allegation of failure to disclose or misrepresentation on a transaction.

    Historically, Realtors have relied upon “Environmental Indemnifications” in buy sell agreements.  The vast majority in the private sector have been slow to implement financial assurance requirements because they have been falsely content that contracts utilized are iron clad.  What we have learned is “Environmental Indemnifications” in buy / sell agreements may not be worth the paper they are written on if not backed by a financial assurance strategy.

    Governmental financial assurance requirements have been around for decades.  For example, when I began working with pollution insurance in the 1980’s we were selling primarily to asbestos / lead abatement / remediation contractors because the government required them to have Contractors Pollution Liability insurance to perform their remedial services.  Industrial and hazardous waste haulers must evidence transportation pollution liability insurance coverage in force before they can move any waste.  Owners of regulated underground storage tanks must evidence financial assurance before they can put any product into a storage tank and the list goes on.

    You may ask, why has the real estate profession been so slow to react?  Answer: Lack of environmental education.  That is where Insurance Professionals add their value in teaming with Professional Realtors.  By coaching Realtors on better protect their E&O exposure while assuring they are dealing with cleaner and greener real estate, backed by a financial assurance strategy.

    To understand why “Best Practices” for realtors means moving beyond traditional environmental indemnifications / site assessments 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 a Buy / Sell Agreement they generally describe 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, 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. A leading source of E&O claims against real estate professionals is failure to disclose potential environmental liabilities. From Sick building Syndrome, (i.e. mold, Legionella, vapor intrusion, asbestos, lead paint, category 3 water…), storm water runoff, natural resource damages, leaking aboveground or underground storage tanks, Renovation Repair & Painting Rule, meth labs… the list goes on.  Pollution insurance can protect against these environmental exposures and much more.
    3. Every real estate transaction presents its unique set of environmental exposures and has changed the way Realtor’s must address environmental financial assurance for their client’s.
    4. eS research has determined that fewer than 50% of Phase I Site Assessments are accurate. eS has heard from environmental professionals who feel in excess of 80% of Phase I site Assessments are inaccurate.  Also, environmental due diligence (Phase I, Phase II…) as part of meeting the innocent landowner defense only protects the real estate owner from the government.  Impacted non-governmental third parties can still file suit.  Note:  In Phase I Site Assessments when investigating who neighbors are that could have contamination going onto a subject property, environmental engineers do a minimum of a 2-mile radius search.  Pollution insurance can protect against third party liabilities.
    5. Illegal disposal of waste in the United States is a tens of billions of dollars a year industry and real estate, especially vacant real estate, is a popular place to illegally dispose of waste. Pollution insurance can protect against illegal disposal of waste.
    6. In the United States there are more than 250,000 known leaking underground storage tanks. How many don’t we know about?  Leaking underground tanks can and do cause Pollutants to go onto neighboring properties.  Pollution insurance can protect property owners if third parties contaminate their property.

    Professional realtors need to know if they are selling / purchasing an asset or environmental liability.

    Educating realtors on managing and transferring environmental exposures will better protect their E&O exposure while driving the sales of pollution liability insurance.  Why is this critical?  Environmental exposures can be a deal killer and realtors not proactively addressing environmental exposures may find their professional liability insurance at risk of a claim when a client discovers an environmental liability on property the realtor sold. 

    Environmental Insurance Products to Meet Financial Assurance on Real Estate Transactions

    Overlooked Benefits of Environmental Liability Insurance

    Unlike other liability exposures impacting commercial real estate owners, pollution losses are not a frequency risk, but rather a severity risk. Because all commercial real estate owners have 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 real estate owners only consider the remediation costs associated with a pollution event. However, often the clean-up costs are far less than other costs that can arise from an environmental 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 must 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 oversees communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability: Most 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

    Property Transfer Coverage:  When buying or selling property there can be unknown preexisting environmental conditions. Since environmental due diligence (All Appropriate Inquiry (AAI), a Phase I or Phase II survey, Baseline Environmental Assessment (BEA)….), 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.  Real estate 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.

    Mergers, Acquisitions & Pollution Protection (MAPP):  Combining Representations & Warranties Insurance w/ Pollution Liability Insurance to keep your company’s growth & value on course.

    Key to any acquisition is the correct valuation and effective due diligence and MAPP operates as a backstop against issues that the 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.

    As we have learned from environmental indemnifications in transactional documents, if there is not a pre-determined financial assurance mechanism in place, the environmental indemnification the seller agrees to may not be worth the paper the agreement is written on.  With MAPP, Environmental Risk Managers, Inc. (ERMI) has raised the bar on financial assurance for M&A deals.

    The insurance industry has learned that one out of every four M&A deals has at least one claim of a breach of the reps and warranties.  In the past, the response has been let’s try to negotiate around the problem.  Unfortunately, negotiating often is expensive, time consuming and rarely brings about the most desirable outcomes for the parties involved.

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

    Environmental Impairment Liability (EIL):  EIL is for commercial real estate owners susceptible to economic loss caused by pollution that actually, or allegedly originated from their property.  Sometimes referred to as pollution legal liability, 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 to cover preexisting conditions and/or new conditions.

    Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site clean-up costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multiyear terms.  Sewer lines and pump/lift stations can be covered by EIL.  Most EIL policies cover above ground storage tanks up to a certain size.  You can also cover multiple locations on a single policy.

    Transportation Pollution Liability: Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or releases of transported 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.  Whether it’s building materials or business supplies, you need to strategize on your exposure to transportation.  How are goods received?  FOB point of Shipment or FOB point of delivery?  Do not be confused by thinking the MCS-90 endorsement is auto pollution liability coverage.

    Underground 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.

    Real estate 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 tank fund, 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.

  • ERMI Business Professional Series Realtors

    Licensed Real Estate Professionals have a duty to perform their services with a level of care which is established by contract and prevailing standards of conduct in their field.  The fact is, Realtors have professional duties to disclose material facts of which encompass environmental exposures / liabilities.

    Today’s, transparent business environment, means real estate professionals must be aware of the evolution of their E&O liability loss exposures.  Claims under E&O often include allegation of failure to disclose or misrepresentation on a transaction.

    Historically, Realtors have relied upon “Environmental Indemnifications” in buy sell agreements.  The vast majority in the private sector have been slow to implement financial assurance requirements because they have been falsely content that contracts utilized are iron clad.  What we have learned is “Environmental Indemnifications” in buy / sell agreements may not be worth the paper they are written on if not backed by a financial assurance strategy.

    Governmental financial assurance requirements have been around for decades.  For example, when I began working with pollution insurance in the 1980’s we were selling primarily to asbestos / lead abatement / remediation contractors because the government required them to have Contractors Pollution Liability insurance to perform their remedial services.  Industrial and hazardous waste haulers must evidence transportation pollution liability insurance coverage in force before they can move any waste.  Owners of regulated underground storage tanks must evidence financial assurance before they can put any product into a storage tank and the list goes on.

    You may ask, why has the real estate profession been so slow to react?  Answer: Lack of environmental education.  That is where Insurance Professionals add their value in teaming with Professional Realtors.  By coaching Realtors on better protect their E&O exposure while assuring they are dealing with cleaner and greener real estate, backed by a financial assurance strategy.

    To understand why “Best Practices” for realtors means moving beyond traditional environmental indemnifications / site assessments 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 a Buy / Sell Agreement they generally describe 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, 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. A leading source of E&O claims against real estate professionals is failure to disclose potential environmental liabilities. From Sick building Syndrome, (i.e. mold, Legionella, vapor intrusion, asbestos, lead paint, category 3 water…), storm water runoff, natural resource damages, leaking aboveground or underground storage tanks, Renovation Repair & Painting Rule, meth labs… the list goes on.  Pollution insurance can protect against these environmental exposures and much more.
    3. Every real estate transaction presents its unique set of environmental exposures and has changed the way Realtor’s must address environmental financial assurance for their client’s.
    4. eS research has determined that fewer than 50% of Phase I Site Assessments are accurate. eS has heard from environmental professionals who feel in excess of 80% of Phase I site Assessments are inaccurate.  Also, environmental due diligence (Phase I, Phase II…) as part of meeting the innocent landowner defense only protects the real estate owner from the government.  Impacted non-governmental third parties can still file suit.  Note:  In Phase I Site Assessments when investigating who neighbors are that could have contamination going onto a subject property, environmental engineers do a minimum of a 2-mile radius search.  Pollution insurance can protect against third party liabilities.
    5. Illegal disposal of waste in the United States is a tens of billions of dollars a year industry and real estate, especially vacant real estate, is a popular place to illegally dispose of waste. Pollution insurance can protect against illegal disposal of waste.
    6. In the United States there are more than 250,000 known leaking underground storage tanks. How many don’t we know about?  Leaking underground tanks can and do cause Pollutants to go onto neighboring properties.  Pollution insurance can protect property owners if third parties contaminate their property.

    Professional realtors need to know if they are selling / purchasing an asset or environmental liability.

    Educating realtors on managing and transferring environmental exposures will better protect their E&O exposure while driving the sales of pollution liability insurance.  Why is this critical?  Environmental exposures can be a deal killer and realtors not proactively addressing environmental exposures may find their professional liability insurance at risk of a claim when a client discovers an environmental liability on property the realtor sold. 

    Environmental Insurance Products to Meet Financial Assurance on Real Estate Transactions

    Overlooked Benefits of Environmental Liability Insurance

    Unlike other liability exposures impacting commercial real estate owners, pollution losses are not a frequency risk, but rather a severity risk. Because all commercial real estate owners have 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 real estate owners only consider the remediation costs associated with a pollution event. However, often the clean-up costs are far less than other costs that can arise from an environmental 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 must 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 oversees communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability: Most 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

    Property Transfer Coverage:  When buying or selling property there can be unknown preexisting environmental conditions. Since environmental due diligence (All Appropriate Inquiry (AAI), a Phase I or Phase II survey, Baseline Environmental Assessment (BEA)….), 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.  Real estate 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.

    Mergers, Acquisitions & Pollution Protection (MAPP):  Combining Representations & Warranties Insurance w/ Pollution Liability Insurance to keep your company’s growth & value on course.

    Key to any acquisition is the correct valuation and effective due diligence and MAPP operates as a backstop against issues that the 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.

    As we have learned from environmental indemnifications in transactional documents, if there is not a pre-determined financial assurance mechanism in place, the environmental indemnification the seller agrees to may not be worth the paper the agreement is written on.  With MAPP, Environmental Risk Managers, Inc. (ERMI) has raised the bar on financial assurance for M&A deals.

    The insurance industry has learned that one out of every four M&A deals has at least one claim of a breach of the reps and warranties.  In the past, the response has been let’s try to negotiate around the problem.  Unfortunately, negotiating often is expensive, time consuming and rarely brings about the most desirable outcomes for the parties involved.

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

    Environmental Impairment Liability (EIL):  EIL is for commercial real estate owners susceptible to economic loss caused by pollution that actually, or allegedly originated from their property.  Sometimes referred to as pollution legal liability, 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 to cover preexisting conditions and/or new conditions.

    Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site clean-up costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multiyear terms.  Sewer lines and pump/lift stations can be covered by EIL.  Most EIL policies cover above ground storage tanks up to a certain size.  You can also cover multiple locations on a single policy.

    Transportation Pollution Liability: Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or releases of transported 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.  Whether it’s building materials or business supplies, you need to strategize on your exposure to transportation.  How are goods received?  FOB point of Shipment or FOB point of delivery?  Do not be confused by thinking the MCS-90 endorsement is auto pollution liability coverage.

    Underground 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.

    Real estate 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 tank fund, 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.

  • 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

  • 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 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

  • TEAMing with Electrical Contractors

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

    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.

    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 Electric Contractors

    May include, but are not limited to; Vapor intrusion;  Lead;  Asbestos;  Mold;  Storm water runoff;  Impacting underground utilities;  Spills from mobile storage tanks;  Ground water contamination;  Puncturing unknown underground storage tanks;  Silica;  No auditing of waste handling and disposal companies;  Natural resource damages;  Defense costs for nuisance claims;  Electrical failure that leads to a pollution loss;  and more…

    Environmental Loss Examples

    1. While installing new overhead electrical lines, an electrical contractor had a subcontractor sinking the new utility poles. The subcontractor hit an underground sewer line with an auger spilling sewage into a neighboring stream. Through contractual liability, the electrical contractor was responsible for the actions of the subcontractor. Cleanup of spilled sewage and repair of the sewer line was in excess of $175,000.
    2. An electrical contractor removed ductwork from a hospital’s HVAC system. It was later determined that the ductwork was home to a dangerous fungus. The dismantling activities and the on-site storage of dismantled ductwork caused the fungus to spread into the hospital. Patients became infected with the fungus; some were even critically infected. The contractor was found liable for the spread to the fungus and faced bodily injury and property damage claims in excess of $1 million.
    3. An electrical control panel error recorded an open valve as closed resulted in a release of thousands of pounds of chlorine gas into the atmosphere. The leak was detected only after several employees and local residents became ill. These same employees and residents later filed claims against both the facility and the electrical contractor that performed the installation. Total cost of the claim forced the contractor to file bankruptcy, and eventually put them out of business.
    4. While working on a historical property, an electrical contractor used a hole saw to cut through a wall. Unknown to the contractor, the saw inadvertently disturbed and released asbestos-containing insulation material. The contractor had to pay cleanup costs for the asbestos fibers released throughout the building, costing in excess of $40,000.
    5. An electrical contractor upgraded the odor control equipment at a poultry plant. However, the upgrades were performed incorrectly, which resulted in total failure of the odor control unit. Neighbors filed claims alleging Bodily Injury and diminution of Property Value. In the end, the electrical contractor had to re-do the job, costing them additional time, labor, and parts for which they received no compensation.
    6. A utility contractor had to pay cleanup costs and business interruption expenses in excess of $500,000 when they ruptured and unmarked petroleum pipeline.
    7. An electrical contractor was using an aboveground storage tank (AST) to store gasoline for his trucks and equipment. One morning, they discovered that vandals had shot a hole in the tank, releasing thousands of gallons of gasoline from the AST. This spill was the subject of a Government-mandated excavation and disposal of the contaminated soils. Cost of the cleanup exceeded $75,000.

    Overlooked Benefits of Environmental Liability Insurance

    Because environmental losses are a severity risk, rather than a frequency risk, the majority of Electrical contractors lack the financial strength to self-insure their potential environmental liabilities. Since every Electrical contractor has notable environmental exposures, consideration to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy, versus self-insuring.

    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 often arise from the loss.

    Three 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.

    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.

    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.

    Underground Storage Tanks

    Financial responsibility requirements ensure that owners and operators of underground storage tank systems have the ability to financially handle a release from an underground storage tank. 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.

    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.

  • 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!

  • 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.