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  • Scrap Metal Recyclers

    What is a Pollutant? 

    Any material, substance, liquid, product, etc… which is introduced into an environment for other than its intended use / purpose.  In other words, something that ends up where it doesn’t belong.  Fresh water, cheese, and milk have all been classified as pollutants by Insurance Carriers under various circumstances. 

    Most commercial insureds assume that claims arising from their operations are covered by the general liability policy.  However, claims resulting from a “pollution incident” are excluded from most general liability policies, which leaves commercial insureds with gaps in coverage.  What pollutants are impacting your business?

    Environmental Exposures Impacting Scrap Metal Recyclers 

    Include, but are not limited to:  PFAS Chemicals;  Storm water runoff;  Asbestos or lead containing materials;  Pollution events as a result of a fire;  Halon releases from fire suppression equipment;  Spills and leaks from the storage and handling of material containers, drums…from vehicles;  Metals with radioactive contamination;  Illegal placement of waste on your property by an unknown 3rd party (Midnight Dumping);  Air emissions;  Vapor Intrusion;  Above and underground storage tanks;  Pollutants on neighboring properties migrating onto yours;  Waste storage/handling practices;  Water and waste water treatment operations;  On site storage of raw materials;  Lubricant oils;  Product cleaning and chemical treatments;   Unsealed truck ramps and work yards;  Uncertainties about the historical use and conditions of property and neighboring properties;  Inadequate or no auditing of hazardous and non-hazardous waste handlers, transporter and disposal companies;  Nuisance odors;  Utilities that cross property;  Natural resource damages;  Silica;  Mold;  Tenants causing a pollution event at one of your leased locations;  and more…  

    Quick Facts

    • There are upwards of 2,000 different contaminants associated with the plastics industry. Examples of some of these contaminants are; antioxidants, asbestos, fillers and reinforces, formaldehyde, heat stabilizers, lubricants, peroxides, preservatives, ammonia, crude oil, flammable retardants, solvents, styrene. 
    • Per the EPA, five of the top six chemicals that are regulated as hazardous waste are commonly produced during the manufacturing and recycling of plastics and electronics. 

    Environmental Claim Scenarios – Operating Locations

    1. A recycling facility caught on fire. While fighting the fire, the fire department’s high-pressure hoses forced melting plastics, metals, insulation, roofing, drywall, chemicals, and other materials onsite to comingle, creating a toxic “sludge”. Some of the “sludge” flowed onto neighboring properties. The recycler was responsible for clean-up, 3rd party property damage & business interruption, and natural resource damages, which totaled over $4,000,000.  NOTE: fire departments are immune from liabilities that may arise from their services.
    2. A scrap metal recycling facility was sued when contamination was discovered in the drinking water at a neighboring property. After further investigation, it was determined that the recycler’s property was not the source of the contamination. The recycler was eventually released from the lawsuit. However, they had to expense more than $40,000 in legal defense fighting the suit. 
    3. A scrap metal recycler had a load contaminated with radioactive cesium get past their detectors and contaminated their line and bag house.  Cost to package, ship and store the waste exceeded $10,000,000
    4. During the night, an unknown party illegally placed drums of hazardous waste at a scrap metal recycling facility.  The containers were not leaking, but had to be tested and properly disposed of at the property owner’s expense. Total cost of the claim for the recycling facility was roughly $50,000. 
    5. Over a period of several decades, a scrap metal recycling facility performed outdoor crushing operations on an unpaved area of the property. Every time it rained or snowed, small amounts of oils and other pollutants washed off the materials / machinery and into the soil. During re-development at a neighboring property, pollutants were discovered and traced back to the recycler’s property. After further investigation, additional neighboring properties we’re found to be impacted as well. Investigation, remediation, legal defense, and 3rd party business interruption cost the recycling facility over $4,000,000.  

    Environmental Claim Scenarios – Transportation 

    1. A scrap metal recycler hired a waste hauler transport its waste materials to a 3rd party disposal site. During transportation, the hauler got into an accident, causing the truck to overturn and spill its load into a nearby stream.  Under CERCLA, the recycler must contribute for their apportionment of the load for cleanup cost since federal law states that you own your waste from cradle-to-grave.  Cost to settle the claim for the recycler was $100,000. 
    2. While picking up a vehicle to tow back to their facility, the driver for the scrap metal company backed into an aboveground fuel storage tank. The fuel escaped the tank’s secondary containment, and released into the surrounding area. Total cost of investigation and remediation was over $150,000. 

    Overlooked Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting scrap metal recyclers, pollution losses are not a frequency risk, but rather a severity risk. Since all scrap metal recyclers have numerous environmental liabilities, 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 the clean-up costs are far less than other costs that can arise from the loss. Such as; 

    1. Defense Costs:  Environmental liabilities are relatively new & very litigious.  Even if you do nothing wrong you can still get named in a suit & have to expense defense costs i.e. legal fees & environmental investigations. 
    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:  Often, the cost to clean up the environmental condition is far less than the associated claims 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 cause an environmental condition.        

    Environmental Liability Insurance Products 

    Premise Pollution Liability (PPL)

    PPL provides coverage for economic loss caused by pollution that actually or allegedly originate from an owned or leased location.  Sometimes referred to as Environmental Impairment Liability (EIL), this coverage is for those who own, operate, lease, or have any other insurable interest in real property / the operations taking place at that property. 

    Policies typically include coverage for on/off-site cleanup, legal defense, 3rd party bodily injury and property damage, 3rd party business interruption, legal defense, Non-Owned Disposal Site Liability (NODS), Transportation Pollution Liability (TPL), and aboveground storage tanks. PPL policies can also cover underground storage tanks, 1st party business interruption (lost revenues incurred by the named insured should a pollution event cause their operations to be suspended).  

    PPL policies can be written to address both unknown preexisting conditions, and new conditions. However, to cover unknown pre-existing conditions, insured’s must provide copies of a recently performed environmental site assessment report for the scheduled property(s).   

    PPL policies can be written with term lengths of 1-year to 5-years, and multiple properties can be scheduled on a single policy, providing a per location premium saving when compared to individual locations on separate policies. 

    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.                    

    Note:  You have potential indirect environmental exposures from the vendors you hire and products you purchase.  Should one of your vendors cause or exacerbate an environmental condition during the loading, unloading, and transporting of your product, your ownership of that product creates liability. It is important to require your trucking contractors to carry Transportation Pollution Liability. 

    Contractors Pollution Liability (CPL)

    CPL coverage protects you from liability for pollution conditions you cause or exacerbate while performing work away from your scheduled properties, whether being performed by you, or on your behalf by a 3rd party. For recyclers, CPL would cover work you perform in the field, such as breaking down materials at a customer’s / supplier’s location prior to shipment to your processing facility. 

    Property Transfer Coverage

    When buying or selling property there can be unknown preexisting environmental conditions. Since a Phase I, Phase II, All Appropriate Inquiry (AAI) survey 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.  Property buyers have negotiated lower interest rates by blending property transfer coverage with their mortgage. 

  • Ski Resorts

    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. 

    Ski Resort owners should be aware that pollutants (such as mold / Legionella) are excluded from coverage on most General Liability policies. And General Liability policies that do provide pollution coverage, typically do so on a limited basis, with inadequate limits and/or strict discovery and reporting requirements for there to be coverage.  If you experience a pollution loss, will your insurance provide adequate coverage? 

    Environmental Exposures Impacting Ski Resorts

    May include, but are not limited to:  Storm water runoff,  Natural Resource Damages;  Wastewater treatment plants/pumping stations exposures from nuisance odor claims, raw sewage rupture, chlorine gas emissions;  Unknowingly using contaminated water for snowmaking,  Sick building syndrome;  Asbestos;  Lead;  Mold / Legionella;  Environmental cleanup and liabilities that result after a fire is extinguished;  Historic site conditions (i.e. old underground tanks, surface impoundments, lagoons, clarifiers, unknown/old landfills);  Sewer lines;  Maintenance/Service garages;  Aboveground and/or underground storage tanks;  Leaks from elevator hydraulic fluid storage tanks; Inadequate or no secondary containment for above ground storage tanks;  Equipment and Parts washer solvents;  Storage and use of pesticides and herbicides;  Air emissions from refrigeration equipment;  Petroleum waste products;  Vehicle and equipment storage/parking over unsealed surfaces;  Transfer and recycling facilities;  Incinerators (i.e. airborne particulates, heavy metals (airborne and in residual ash), airborne volatile organic compounds);  Spills/releases during loading/unloading process;  Waste handling and disposal operations;  No auditing of waste handling and disposal companies;  Possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Leaking fluids and fuels from maintenance and grooming equipment;  Contamination from neighboring properties migrating onto your property…. 

    Environmental Claim Scenarios

    1. A ski resort unknowingly used contaminated water for its snow making resulting in hundreds of thousands of gallons of contaminated water being spread across the lower part of the mountain.  Old mining tailings from a closed down mine in the area was the source of the contamination and had been contaminating the water for some time. The resulting claim was for over $500,000 for the cleanup and remediation of the contaminated soil and mine area.
    2. A chlorine release from a wastewater treatment plant resulted in toxic air emissions. Area residents and businesses were evacuated, and several people were hospitalized for inhalation of fumes.  Bodily injury claims amounted to $70,000 and business interruption claims totaled $120,000.
    3. Maintenance workers at a resort were unloading 400-gallon totes of muriatic acid, which is used as a pool chemical.  One of the totes was dropped, releasing 150 gallons of the acid which ran into a nearby storm sewer.  The acid caused aquatic life to die and other natural resource damages.  Remediation costs and natural resource damages exceeded $400,000.
    4. While remodeling rooms at a hotel resort, contractors discovered mold within the building’s walls and ceilings. After further investigation, mold was also found throughout the property. Cost to remediate the mold and lost rental revenues during remediation cost the resort over $600,000. 
    5. During the night, a fire broke out and the fire department’s high-pressure hoses forced melting plastics, metals, insulation, roofing, drywall, chemicals, and other materials to build up inside the building’s foundation, creating a toxic “sludge”. Some of the toxic “sludge” escaped the building and migrated into the surrounding soils and a nearby stream. The property owner was responsible for clean-up costs and natural resource damages, which totaled over $2,000,000.  NOTE: fire departments are immune to pollution claims arising from their work while putting out fires.
    6. An electrical contractor was hired to upgrade a buildings electrical system.  During trenching operations, a backhoe hit a natural gas pipeline causing an explosion. Third parties filed bodily injury claims against the contractor, as well as the resort whose club house was destroyed in the explosion. Claims exceeded $4.5 million. 
    7. A maintenance garage used solvents for parts washing performed the work over a drain leading to an on-site septic system. Over time, the septic system leach field migrated into the surrounding soils and groundwater. At the time of the septic system closure and conversion to a public sewer system, the contamination was discovered. Site remediation involved soil removal and installation of a groundwater recovery system. The costs exceeded $720,000. 
    8. The facilities department for a ski resort hired a licensed hazardous waste transporter to deliver and pick-up three barrels of spent solvents, used for cleaning their boiler, to a treatment plant. While loading on the ski resort grounds, one barrel fell and spilled its contents, which seeped into the ground.  After a period, neighbors notified the state health department that their well water smelled odd.  Health officials determined that chemicals from the accident had seeped into their wells. The ski resort paid $1.2 million in damages and clean-up costs.
    9. A fiber optics company was hired to install a network of data and voice cables. The job included directional drilling under several roads. While drilling, the contractor hit a fuel line and did not report it.  After about 2 years, residents in the area smelled gas in their well water. During investigation, the damaged fuel line was discovered and determined as the source of contamination. Since the fiber optics company was no longer in business, the ski resort was held liable for damages and clean-up costs in excess of $2.7 million.

    Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting Ski Resorts, pollution losses are not a frequency risk, but rather a severity risk. Because all Ski Resorts 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 the clean-up costs are far less than other costs that often 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 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

    ENVIRONMENTAL IMPAIRMENT LIABILITY (EIL) 

    EIL is for ski resorts susceptible to economic loss caused by pollution that actually or allegedly originated from their operations.  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 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 clean up costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multi year terms.  Sewer lines and pump/lift stations can be covered by EIL.  Most EIL policies cover above ground storage tanks.

    PROPERTY TRANSFER COVERAGE 

    When buying, selling or condemning property their can be unknown preexisting environmental conditions. Since a Phase I or Phase II survey 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. 

    TRANSPORTATION POLLUTION LIABILITY

    Generally, business auto or truckers’ policies will exclude pollution losses arising from spills or other releases of their 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.  Note:  An MCS-90 endorsement is not pollution coverage.  

    UNDERGROUND AND ABOVE GROUND 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 system. 

    Note:  For Ski Resorts, you have potential indirect environmental exposures from the vendors you hire to perform services.  Should your vendors cause an environmental problem or exacerbate an existing environmental issue their general liability insurance policy generally will have either an absolute or total pollution exclusion.  In order to be protected you should make sure your vendors have the proper environment insurance coverage before they do any work on your behalf.

    CONTRACTORS POLLUTION LIABILITY 

    Ski Resorts have potential indirect environmental exposures from the service vendors & contractors they hire to perform work on their behalf.  CPL insurance protects Ski resorts should their vendors cause or exacerbate an environmental condition. 

  • Fruit Farmers

    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. 

    Every agricultural business is impacted by a variety of environmental issues/liabilities.  This Competitive environmental Intelligence (CeI) offers a partial list of environmental exposures agricultural business may face.

    Environmental Exposures Impacting Fruit Farmers 

    Include, but are not limited to; Storage, use and disposal of fertilizers, pesticides, and herbicides;  disposal of liquid wastes in septic or leach systems;  storage of fuels, antifreeze, oil and hydraulic fluids;  leaking above and/or underground storage tanks;  air emissions from chemical applications and animal waste;  storm water runoff; vapor intrusion;  spills from loading and unloading of farm equipment and supplies;  faulty refrigeration units;  overuse of irrigation;  on-site disposal of trash, garbage and other waste materials;  old equipment storage yards; on-site compost piles, wastewater lagoons or injection wells;  historical contamination;  natural resource damages;  old or abandoned wells not properly closed allowing contamination into the soil and ground water;  improper management of protected or sensitive areas like wetlands;  vandalism;  easements on the property (rail/roadways, pipelines, power lines, waterways) with potential environmental implications;  uncontained floor drains;  in-ground sumps and pits;  inadequate or no auditing of hazardous and non-hazardous waste handlers;  spills and air emissions from emergency power generator systems;  adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Siltation of nearby streams from improper erosion control management ….

    Environmental Loss Examples

    1. Over a period of several years, water used to cool fruit down prior to shipping on the cooling pads at a Cherry farm seeped into the surrounding grounds causing ground water contamination impacting local residents water wells. Total costs for investigation, 3rd party property damage claims, remediation, and legal fees exceeded $400,000.
    2. A property owner had his drinking water well tested prior to selling his land.  Testing revealed that the well contained an alarmingly high concentration of total petroleum hydrocarbons, further investigation revealed that the source of the contamination were several dozen drums of waste oil and maintenance fluids buried on a neighboring farm.  Though the drums were buried by the previous farm owner, the current owner was nevertheless responsible for disposal of the drums, soil and groundwater cleanup, and bodily injury and property damage claims submitted by the neighboring property owner.  Total cost exceeded $1,000,000 and caused the farmers bankruptcy.
    3. Shortly after spraying, a fruit farmer received a 3rd party claim from a neighboring farmer accusing them of over application resulting in a chemical drift which impacted the neighboring farmer’s crop, contaminating it. The cost to clean up and settle the claim totaled $550,000.
    4. Phase I and Phase II environmental assessments involve limited sampling of a property and cannot guarantee that the property is clean. For example, a real estate limited partnership, acquired property previously used for farming on which they planned to build a mall. The firm hired a consultant to conduct a Phase I Environmental Assessment. The property was determined to be “clean.” However, when excavation for the mall began, 100 drums of buried pesticides and herbicides were unearthed. The chemicals contaminated the soil and had to be removed at the firm’s expense. Remediation and drum disposal costs exceeded $750,000 
    5. The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000.  

    Benefits of Environmental Liability Insurance

    Agricultural operations generally lack the financial strength to self-insure their environmental liabilities.  Since every agricultural operation is impacted by environmental liabilities 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.

    The Three Main Benefits environmental liability insurance offers:  

    • 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.  
    •  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….?
    • 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 Products

    Environmental Impairment Liability (EIL)

    EIL is for agricultural operations susceptible to economic loss caused by pollution that actually or allegedly originated from their properties.  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 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 clean up costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multi year terms.  Most EIL policies cover above ground storage tanks.  You can cover multiple locations on a single policy.

    Transportation Pollution Liability (TPL)

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

    Contractors Pollution Liability (CPL)

    Note:  Agricultural operations have potential pollution exposures from the vendors they hire to perform services.  Should your vendors cause an environmental problem or exacerbate an existing environmental issue their general liability insurance policy typically will have an absolute or total pollution exclusion.  In order to be protected you should make sure your vendors have this insurance coverage before they begin doing work.

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

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

    Property Transfer Coverage

    Note:  This coverage is designed for buyers or sellers of real  properties.

    When buying or selling property their 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.  You can cover multiple locations on a single policy.

  • Commercial / Botanical Gardens

    What is a Pollutant? 

    Any material, substance, liquid, product, etc… which is introduced into an environment for other than its intended use / purpose. In other words, something that ends up where it doesn’t belong. Fresh water, cheese, and milk have all been classified as pollutants by Insurance Carriers under various circumstances.

    Most commercial insureds assume that claims arising from their operations are covered by the general liability policy. However, claims resulting from a “pollution incident” are excluded from most general liability policies, which leaves commercial insureds with gaps in coverage. What pollutants are impacting your business?  This Environmental Risk Assessment (eRA) offers a partial list of environmental exposures impacting the aviation industry.

    Environmental Exposures Impacting Commercial / Botanical Gardens

    A partial list of environmental exposures impacting Commercial and Botanical Gardens are:  

    • Storage, use and disposal of fertilizers, pesticides, and herbicides
    • Storage of fuels, antifreeze, oil and hydraulic fluids
    • Above and/or underground storage tanks
    • Air emissions from chemical applications
    • Storm water runoff 
    • Vapor intrusion 
    • Spills from loading and unloading of chemicals and supplies
    • Overuse of irrigation
    • Compost piles
    • Natural resource damages 
    • Vandalism
    • Language Barrier
    • Easements on the property (pipelines, power lines, waterways) with potential environmental implications
    • Waste handlers
    • Adverse reactions and interactions of chemical compounds that accidentally commingle during a fire
    • Siltation of nearby streams from erosion and runoff…. 

    Environmental Loss Examples For Commercial / Botanical Gardens

    1. Prior to selling his land a property owner had their water well tested.  Testing revealed that the well water contained petroleum hydrocarbons.  The source of the contamination was determined to be an unknown underground storage tank that used to be used for heating the neighboring commercial gardens greenhouses.   Other neighbors had their well water tested and contamination was discovered.  Disposal of the tank, contaminated soil and groundwater cleanup, along with bodily injury and property damage claims submitted by the neighboring property owners exceeded $3,000,000.
    2. A commercial garden used treated waste water as a fertilizer in a land application process.  The wastewater tested prior to application.  After several months of application, heavy metals and high counts of e-coli were found in the soils.  The garden was required to pay remediation costs in excess of $265,000.
    3. Over a period of years, storm water from a commercial garden entered a nearby stream.  Excessive algae and bacteria in the stream and lake the stream emptied caused riparian property owners to filed claims that exceeded $3,000,000 for property damage, loss of enjoyment, natural resource damages and perceived bodily injury.
    4. A Garden hired a third party to apply chemicals to their plants.  The chemical applicator used a cheaper but unapproved chemical.  Testing revealed that a stream bank that ran through the garden was contaminated with the unapproved chemical.  Downstream from the garden more contamination was found on third party properties.  Cost to remediate the stream site was in excess of $300,000.  The chemical applicator did not have a pollution policy and so under Federal law, the garden owns the land that was the source of the contamination is responsible for clean up, third party bodily injury, third party property damage….
    5. A municipality acquired property previously used for farming on which they planned to develop a community garden. A committee was formed which hired an environmental engineer to perform environmental due diligence.  The Phase I site assessment determined the property was “clean.”  However, when development of the garden began, drums of buried used oil, pesticides and herbicides used by the previous owner were discovered. The chemicals contaminated the soil and had to be removed at the municipalities expense which exceeded $75,000.   The municipality took legal action seeking reimbursement from the previous land owner and the environmental engineers professional liability policy.
    6. The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000.

    Environmental Risk Transfer Strategies

    Commercial gardens generally lack the financial strength to self insure their environmental liabilities.  Since every garden operation is impacted by 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.

    The three main benefits environmental liability insurance offers:  

    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, .  
    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 IMPAIRMENT LIABILITY (EIL) 

    EIL is for commercial gardens susceptible to economic loss caused by pollution that actually or allegedly originated from their properties.  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 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 multi year terms.  Most EIL policies cover above ground storage tanks.  You can cover multiple locations on a single policy.

    PROPERTY TRANSFER COVERAGE 

    Note:  This coverage is designed for buyers or sellers of real  properties.

    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.  You can 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.  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 GROUND STORAGE TANKS 

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

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

    CONTRACTORS POLLUTION LIABILITY 

    Note:  Commercial Gardens have potential environmental exposures from the vendors they hire to perform services.  Should your vendors cause an environmental problem or exacerbate an existing environmental issue their general liability insurance policy typically will have either an absolute or total pollution exclusion.  In order to be protected you should make sure your vendors have this insurance coverage before they begin doing work.

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

    Secondly, standard contractors (i.e. general contractors, HVAC, plumbing, electrical, mechanical, janitorial, demolition, drilling, excavation, highway, street and paving contractors, rigging, utility, millwrights, artisan, etc.), for these contractors there is contingent contractors pollution liability (CCPL) coverage. Basically they are afforded the same coverage as remedial contractors but the cost to purchase this insurance is substantially less. 

    PROFESSIONAL LIABILITY 

    Note:  Commercial Gardens hire professionals to perform environmental site assessments, (mold, radon, asbestos or lead testing, Phase I, II, or III site assessments, tank testing, soil, waste water, air emissions…) you should make sure they have this coverage in force before they begin working for you.

    Should an environmental engineer/consultant or analytical laboratory make an error or an omission in performing professional services for you they will need a E&O policy including pollution for there to be coverage.  Some professional services could include Phase I or Phase II site assessments, All Appropriate Inquiry (AAI), air monitoring, lead and asbestos assessments, waste characterization, remedial action plans, water testing, mold surveys, environmental training….

  • Aviation

    What is a Pollutant? 

    Any material, substance, liquid, product, etc… which is introduced into an environment for other than its intended use / purpose. In other words, something that ends up where it doesn’t belong. Fresh water, cheese, and milk have all been classified as pollutants by Insurance Carriers under various circumstances. 

    Most commercial insureds assume that claims arising from their operations are covered by the general liability policy. However, claims resulting from a “pollution incident” are excluded from most general liability policies, which leaves commercial insureds with gaps in coverage. What pollutants are impacting your business?  This Environmental Risk Assessment (eRA) offers a partial list of environmental exposures impacting the aviation industry.

    Environmental Exposures Impacting the Aviation Industry

    Include, but are not limited to:  PFAS chemicals; Underground and above ground storage tanks;  Vapor intrusion;  Storm water runoff;  Releases or spills during fueling operations;  De-icing operations;  Environmental cleanup and liabilities that occur after a fire is extinguished;  Historical contamination from past operations;  Natural resource damages; Easements that cross the property which may leak or spill hazardous materials;  Impacting sensitive areas such as wetlands or endangered species;  Corroded wastewater and storm water sewers;  Old and/or unknown leaking underground storage tanks;  Leaks from elevator hydraulic fluid storage tanks;  No auditing of waste handling and disposal companies;  Tenants using or storing environmentally sensitive materials, chemicals, waste….; Spill of oils/fuels/chemicals brought onsite; Vandalism; Sick building syndrome; Mold / Legionella; Asbestos;  Lead;  loading and unloading products/materials from tucks, rail road, barges, aircraft over unsealed ground; Dust & vehicles emissions;  Adverse reactions and interactions of chemical compounds that accidentally commingle during a fire; Wastewaters generated from human septage; Janitorial cleaning compounds;  No emergency and spill control plans;  nuisance odors;  Storm water drains near the aircraft fueling locations;  Inadequate spill control materials and emergency response contractor agreements; Landscaping operations using chemicals such as Roundup; Silica; Vapor intrusion….

    Environmental Loss Examples

    1. American Airlines, under threat of indictment, pleaded guilty to illegally storing hazardous waste at the Miami airport and transporting hazardous and poisonous material improperly on its passenger jet for the last five years.  The company will pay $8 million in fines along with making changes to ensure its passengers are safe.  They will also apologize in a full-page ad in the Miami Herald.  An investigation of the company began after an illegally marked, undocumented bag of pesticide broke open in the cargo hold on a flight to Ecuador, releasing fumes that forced the evacuation of 53 passengers and crewmembers.
    2. A federal Express cargo plane carrying hazardous materials crashed at the Newark International Airport.  The airport, one of the nation’s busiest, was closed after the crash as authorities tried to clear the tarmac and put out the flames on the aircraft.  After seven hours the airport was reopened but only for departures.
    3. The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000.
    4. A contractor was hired to remove two underground storage tanks and associated contaminated soil. During storage tank removal, the contractor’s backhoe hit a natural gas pipeline causing an explosion. Third parties filed bodily injury claims against the contractor, as well as the property owner whose building was destroyed in the explosion.  Total claims came to $2,500,000.
    5. An environmental study performed as part of a regional airport expansion project uncovered two areas of contamination.  Leakage was discovered at the airport fueling system.  In addition, containment areas for de-icing fluid were found to be inadequate, thereby allowing contaminants to enter a lake adjacent to the airport property.  Costly remediation for soils and groundwater was required.  Also, the state environmental agency fined the airport for natural resource damages due to the impact on several pairs of bald eagles at the lake.
    6. A waste hauler was hired to transport its waste engine oil.  During transport the vehicle got into an accident and overturned.  The waste oil went into a nearby storm sewer that emptied into a stream.  Federal law states you own your waste from cradle to grave so the waste generator must contribute for their apportionment of the load for cleanup cost.  Cost to settle the claim was $300,000.
    7. During an airport expansion project, a contractor came across oily smelling soils.  An environmental investigation revealed that an FBO that leased space from the airport caused the contamination.  The airport exercised the environmental indemnification as outlined in the lease agreement between the Airport and FBO.  The FBO was self-insuring their environmental liabilities and the claim caused for their bankruptcy.  Since the airport owns the land, under federal law they are ultimately responsible for the environmental condition of the property and the airport paid in excess of $1,000,000 for cleanup costs.

    Benefits of Environmental Liability Insurance

    Because pollution losses tend to be a severity, versus a frequency issue, most aviation operations lack the financial strength to self-insure their environmental liabilities.  Since every aviation business is impacted by environmental liabilities, 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.

    The Three Main Benefits environmental liability insurance offers:  

    • 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.  
    •  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….?
    • 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 Products 

    ENVIRONMENTAL IMPAIRMENT LIABILITY (EIL) 

    EIL is for aviation businesses susceptible to economic loss caused by pollution that actually or allegedly originated from their properties.  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 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 clean up costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multi year 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 cover multiple locations on a single policy.

    PROPERTY TRANSFER COVERAGE 

    When buying or selling property their 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.

    TRANSPORTATION POLLUTION LIABILITY

    Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or 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.  Whether it’s fuel or other materials common in the aviation business 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 GROUND STORAGE TANKS 

    Storage tank financial responsibility requirements ensure that owners/operators of underground storage tank systems can 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.  

    Who are you doing business with?  An aviation business is legally liable when environmental contamination originates from site or activity-related business operations on owned property. Hiring licensed third-party vendors to identify, remediate, transport, store, treat, dispose of pollutants does not automatically transfer the associated environmental liabilities to the third-party vendor.  General contractors, subcontractors, vendors hired to work at a facility or provide a service present environmental and financial risk, as well.

    To minimize your environmental exposure, carefully verify each vendor’s qualifications and, when appropriate, compliance with state and federal licensing and regulations. Utilizing contracts that legally transfer liability to the vendor can further reduce exposure.  Confirm proper insurance is in place to meet contractual requirements.  Should an environmental accident happen, and the vendor is unable to cover the resulting clean-up and third-party compensation costs, the property owner can be held responsible for the uncovered costs, it is critical to know “who you are doing business with.”

    CONTRACTORS POLLUTION LIABILITY (CPL)

    Note:  For aviation operations you have potential indirect environmental exposures from the service vendors you hire.  Should your vendors cause an environmental problem or exacerbate an existing environmental issue their general liability insurance policy probably will have either an absolute or total pollution exclusion.  

    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, mold, lead, asbestos, defense outside the limits, off-site disposal coverage, emergency response cost….  

    PROFESSIONAL LIABILITY (E&O)

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

  • Vineyards & Wineries

    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 trucking companies assume that claims arising from their operations are covered by their general liability policy or commercial auto policy. However, claims resulting from a “pollution incident” are typically excluded from general liability and commercial auto policies (except for fluids necessary to operate a vehicle). Policies that do provide pollution coverage, typically do so on a limited basis and with inadequate limits, which leaves trucking companies exposed to potentially uncovered claims. What pollutants are impacting your business?

    Environmental Exposures Impacting Vineyards & Wineries

    Due to their operations, Vineyards & Wineries (V&W) face a wide array of environmental exposures.  The following offers a partial list of environmental exposures V&W may face:  Storage, use, disposal of fertilizers, pesticides, herbicides (Glyphosate)….;  disposal of wastes in lagoons, septic or leach systems;  leaking above ground and/or underground storage tanks;  air emissions from chemical applications;  storm water runoff;  storage of fuels, antifreeze, oil and hydraulic fluids;  spills from loading and unloading of farm equipment and supplies;  old equipment storage yards;  on-site compost piles;  historical contamination;  overuse of irrigation;  natural resource damages;  vandalism; inadequate or no auditing of waste handlers;  wastewater lagoons;  old or abandoned wells not properly closed allowing contamination into the soil and groundwater;  easements on the property (rail/roadways, pipelines, power lines, waterways) with potential environmental implications;  uncontained floor drains;  spills and air emissions from emergency power generator systems;  adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Siltation of nearby streams from improper erosion control management;  air emissions from refrigerants ….

    Environmental Loss Examples for Vineyards & Wineries

    1. Over the years, a winery 40-year-old wastewater treatment plant had been upgraded several times.  Improper closure of an on-site surface impoundment allowed gradual seepage into groundwater.  Constituents contaminated the underlying groundwater, which was a potable water supply for the neighboring community.  Groundwater cleanup and emergency water supplies for residents exceeded $350,000. 
    2. Several years after a vineyard was planted excessive algae and bacteria developed in a nearby stream and lake.  Riparian owners filed claims in excess of $1,000,000 against the vineyard for property and natural resource damages, perceived bodily injury and loss of enjoyment caused by excessive fertilizer runoff.  
    3. A broken seal in the refrigeration line allowed refrigerants to sicken several guests while touring the winery plant.  Injured guest and workers were taken to the local hospital for treatment.  Third part bodily injury claims were filed against the winery.  
    4. A new V&W acquired property previously used for farming.  An environmental site assessment determined the property to be “clean.”  When excavation for the winery began, the excavation contractor ruptured several drums of pesticides and herbicides that were illegally burred on the property.  Soil and ground water remediation along with drum disposal costs exceeded $1,000,000 
    5. The concrete secondary containment of a 5,000-gallon diesel aboveground storage tank failed when 4,000 gallons spilled into the containment.  The diesel caused soil and ground water contamination.  Total costs for investigation, removal/disposal and legal fees exceeded $400,000.  

    Benefits of Environmental Liability Insurance

    V&W generally lack the financial strength to self-insure their environmental liabilities.  Since every V&W is impacted by environmental liabilities 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.

    The three main benefits environmental liability insurance offers:  

    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, .  
    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: 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 for Vineyards & Wineries

    ENVIRONMENTAL IMPAIRMENT LIABILITY (EIL) 

    EIL is for V&W that own, rent, lease, operate or have any other insurable interest in real property (a fixed site facility like a vineyard, processing 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 clean up costs, legal defense expenses, transportation pollution liability, off site disposal coverage….  Multi year term policies can be negotiated. 

    PROPERTY TRANSFER COVERAGE 

    Note:  This coverage is designed for buyers or sellers of vineyards and wineries.

    When buying or selling property there can be unknown preexisting environmental conditions. Since a Phase I or Phase II survey 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. 

    Property transfer coverage assists to keep the property at its maximum value while allowing the insured to negotiate more favorable loan terms than property not supported by this coverage.      

    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 overturn of transported cargo.    

    UNDERGROUND GROUND 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.  

    CONTRACTORS POLLUTION LIABILITY 

    Note:  V&W have potential environmental exposures from the vendors they hire to perform services.  Should your vendors cause an environmental problem or exacerbate an existing environmental issue their general liability insurance policy typically will have either an absolute or total pollution exclusion.  In order to be protected you should make sure your vendors have this insurance coverage before they begin doing work.

    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, off-site disposal coverage ….  

    PROFESSIONAL LIABILITY

    Note:  V&W hire professionals to perform environmental site assessments, (mold, radon, asbestos or lead testing, Phase I, II, or III site assessments, tank testing, soil, waste water, air emissions…) you should make sure these professionals  have this coverage in force before they begin working for you.

    Should a environmental engineer/consultant or analytical laboratory make an error or an omission in performing professional services for you they will need a E&O policy 

     

    including pollution for there to be coverage.  Some professional services could include Phase I or Phase II site assessments, All Appropriate Inquiry (AAI), air monitoring, lead and asbestos assessments, waste characterization, remedial action plans, water testing, mold survey’s, environmental training….

  • UST and AST Contractors

    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 trucking companies assume that claims arising from their operations are covered by their general liability policy or commercial auto policy. However, claims resulting from a “pollution incident” are typically excluded from general liability and commercial auto policies (except for fluids necessary to operate a vehicle). Policies that do provide pollution coverage, typically do so on a limited basis and with inadequate limits, which leaves trucking companies exposed to potentially uncovered claims. What pollutants are impacting your business?

    Environmental Exposures Impacting Contractors Performing Underground/Aboveground Construction Services

    Some of the common environmental exposures impacting contractors doing excavation, site preparation, drilling, utilities, include: Stormwater runoff; completed operations exposures including incomplete line hookup or improper system construction causing spills or emissions; fumes, lubricant oils and other fluids leaking from field equipment; release of oils/fuels as a result of vandalism; site preparation/excavation work through preexisting unknown contaminated soil; air emissions from dust and debris, impacting abandoned underground storage tanks, spreading of unknown preexisting contaminated soil as fill, impacting groundwater from drilling and excavation work (i.e. cross contamination of aquifers, etc.); impacting underground utilities and other underground structures;  no auditing of waste handling and disposal companies;  release from portable storage tanks;   natural resource damages;  vapor intrusion, Silica…. 

    Environmental Loss Examples

    An excavation/grading contractor unknowingly spread petroleum-contaminated soil across a project site during fill operations for a commercial office building. 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. 

    1. While replacing an AST, a tank contractor employee inadvertently hit the temporary AST holding the contents of the tank being replaced.  By the time the contractors employees were able to set up barriers to contain the spill, the tanks contents migrated into the ground, ground water and nearby by sewer system.  Clean up costs and business interruption claims were in excess of $150,000.
    2. A family operated gas station hired a UST contractor to remove two underground storage tanks and associated contaminated soil.  A backhoe hit a natural gas pipeline causing an explosion.  This parties filed bodily injury claims against the contractor, as well as the owner whose building was destroyed in the explosion.  Claims exceeded $2,500,000.  
    3. An environmental contractor was hired by a convenience store to conduct an underground storage tank compliance inspection.  During the soil-gas survey process, the contractor punctured a diesel fuel line with a probe, causing 11,655 gallons of diesel to spill of which only 4,000 gallons were recovered.  Total claims for cleanup and business interruption exceeded $400,000.
    4. Faulty Pump Contaminates Local Creek and Pond.  During routine transfer of diesel fuel from a fuel truck to an onsite job fuel storage tank, a pump malfunctioned releasing approximately 4,500 gallons of diesel fuel.  The product migrated along the edge of the tanks into a culvert, spilled into an adjacent creek, and pooled in a pond. The state department of environmental management was notified, and the company’s spill response plan was initiated. Approximately 644,300 gallons of contaminated water was removed from the creek and pond at a cost of $63,000.
    5. During excavation a contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured and unmarked petroleum pipeline.

    Benefits of Environmental Liability Insurance

    Tank contractors generally lack the financial strength to self-insure their environmental liabilities.  Since every tank contractor is impacted by environmental liabilities and in most cases required by law to evidence environmental financial assurance 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.

    The three main benefits environmental liability insurance offers:  

    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, .  
    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 for UST and AST Contractors

    CONTRACTORS POLLUTION LIABILITY 

    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, mold, lead, asbestos, defense outside the limits, off-site disposal coverage ….  

    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?

    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 clean up costs, legal defense expenses, transportation pollution liability, off site 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 overturn 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.  

    PROPERTY TRANSFER LIABILITY 

    When buying or selling property there can be unknown preexisting environmental conditions. Since a Phase I or Phase II survey 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. 

    Property transfer coverage assists to keep the property at its maximum value while allowing the insured to negotiate more favorable loan terms than property not supported by this coverage.      

  • Trucking Companies

    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 trucking companies assume that claims arising from their operations are covered by their general liability policy or commercial auto policy. However, claims resulting from a “pollution incident” are typically excluded from general liability and commercial auto policies (except for fluids necessary to operate a vehicle). Policies that do provide pollution coverage, typically do so on a limited basis and with inadequate limits, which leaves trucking companies exposed to potentially uncovered claims. What pollutants are impacting your business?

    Environmental Exposures Impacting Trucking Companies 

    May include, but are not limited to:  Leaking fuel and waste oil storage tanks;  PFAS Chemicals; Storm water runoff;  Vapor intrusion;  Loading and unloading of cargo;  Parking equipment over unsealed surfaces allowing contaminants such as oil, fuel, anti-freeze, hydraulic fluids, asbestos… to pollute the ground & ground water;  Pollution liabilities that occur while transporting cargo;  Air Emissions from idling equipment;  Pollution cleanup and liabilities that occur after a fire;  Parts cleaning solvents;  Accumulated old batteries which contain leached acidic liquids;  Accumulated old tires and equipment;  Unsealed truck ramps;  Warehousing environmentally sensitive cargo;  Contaminants flowing from service bays into the sanitary sewers, ground, neighboring properties;  Paint residues from the body shop;  Wash waters from truck wash;  Inadequate or no auditing of hazardous and non-hazardous waste handlers, transporter and disposal companies;  Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire…. 

    Environmental Claims Scenarios

    1. A carrier had wash water and other cleaning solvents from their wash bay released into the soil and ground water after a pipe broke.  The break was not detected for several months.  Cost to remediate the soil and ground water was in excess of $175,000.
    2. A waste hauler was hired to transport its used motor oil. The waste hauler got into an accident which caused the contents of the tanker to be released on the ground.  Under Federal law (CERCLA) you own your waste from cradle to grave, so the carrier had to pay their apportionment of the remediation costs which totaled $450,000.
    3. A carrier performed loading and unloading of equipment over unsealed truck ramps.  Over a period of several years, ground water became contaminated from pollutants that were released from idling trucks and storm water runoff.  Since the ground water was the only source of drinking water for surrounding residents and the state environmental regulatory agency designated the transportation company as the responsible party.  The carrier paid $1,400,000 in cleanup costs and supply suitable drinking water until the local municipality could extend water services out to the surrounding residents.  
    4. A delivery truck got into an accident and caught on fire.  The burning cargo created toxic fumes and when the fire department put out the fire it created contaminant runoff that flowed into a nearby stream.  Cost to remediate the site and claims from third parties for bodily injury and property damage due to exposure to toxic fumes exceeded $800,000.
    5. The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 2,000 gallons into the containment. The diesel seeped into the underlying soils.  Total cost for investigation, removal and disposal exceeded $200,000. 
    6. While transferring hazardous materials from one truck to another, a forklift operator cut a corner too tight causing the load to shift and spill.  Cost to clean up exceeded $85,000. 
    7. A milk delivery truck got into an accident, causing thousands of gallons of milk to escape from the tank and flow into a nearby stream. The milk depleted oxygen in the area of the stream, causing a notable fish kill.  Total cost of remediation and natural resource damages cost the trucking company over $75,000. 

    Benefits of Environmental Liability Insurance 

    Unlike most liability exposures impacting trucking companies, pollution losses are not a frequency risk, but rather a severity risk. Since every trucking company is impacted by environmental liabilities, 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 & very litigious.  Even if you do nothing wrong you can still get named in a suit and must expense defense costs (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 for Trucking Companies 

    Transportation Pollution Liability (TPL)

    Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of their cargo. Transportation pollution liability affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and overturn of transported cargo.  Make sure you do not confuse the MCS-90 endorsement as being TPL coverage, it’s 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.  

    Environmental Impairment Liability (EIL) 

    EIL is for transportation companies susceptible to economic loss caused by pollution that actually or allegedly originated from their fixed site operations.  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 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.

    Contractors Pollution Liability 

    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, mold, lead, asbestos, defense outside the limits, off-site disposal coverage ….  

    Underground Storage Tanks 

    Financial responsibility requirements ensure that owners and operators of underground storage tank systems can 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.  

    Property Transfer Coverage 

    When buying or selling property there can be unknown preexisting environmental conditions. Since a Phase I or Phase II survey 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. 

    Property transfer coverage assists to keep the property at its maximum value while allowing the insured to negotiate more favorable loan terms than property not supported by this coverage.      

  • Tribal Nations

    What is a Pollutant? 

    Any material, substance, liquid, product… 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. What pollutants are impacting you?

    Environmental Exposures Impacting Tribal Nations

    Include, but are not limited to:  Wastewater treatment plants/pumping stations exposures from nuisance odor claims, raw sewage rupture, chlorine gas emissions;  Storm water runoff; Vapor intrusion;  Sick building syndrome;  Asbestos;  Lead;  Mold;  Historical contamination from agriculture, mining, lagoons, landfills, manufacturing, scrap yards, old in ground tanks, surface impoundments, unknown/old landfills;  Sewer lines;  Maintenance garage services;  Aboveground and/or underground storage tanks;  Leaks from elevator hydraulic fluid storage tanks;    Inadequate or no secondary containment for above ground storage tanks;  Contamination from neighboring properties migrating onto your land; Storage and use of pesticides and herbicides;  Petroleum waste products;  Vehicle and equipment storage/parking over unsealed surfaces; Storage of Antifreeze, oil, Hydraulic Fluids….;  Parks, lakes, rivers and open land (i.e. midnight dumping, discharge of raw sewage, asphalt paving projects with storm discharge to open waters, unknown surface conditions);  Transfer and recycling facilities;  Hosting household hazardous material collection days or other environmentally sensitive materials/chemicals;  Landfills;  Excavating through and spreading of unknown preexisting contaminated soil; Tenants using or storing environmentally sensitive materials, chemicals, waste….; Inadequate methane collection or venting;  Leachate;  Natural resource damages;  Incinerators (i.e. airborne particulates, heavy metals (airborne and in residual ash, airborne volatile organic compounds);  Spills/releases during loading/unloading process from trucks, rail road, barges, aircraft;  Waste handling and disposal operations;  No auditing of waste handling and disposal companies;  Contamination from cemeteries;  Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Brownfields; Animal waste management; Compost piles; Vandalism, sick building syndrome….

    Note:  The above list is intended only to outline some typical pollution exposures common to Tribal Nations it is not all-encompassing.  If a Tribal Nations has schools, airports, hospitals, golf courses or other operations not outlined above contact environmental Risk Managers. (Phone 231-218-1041) for a list of common environmental exposures.

    Environmental Loss Examples: Tribal Nations

    • Chlorine release at a wastewater treatment plant resulted in toxic air emissions. Area residents and businesses were evacuated and several people were hospitalized for inhalation of fumes.  Bodily injury claims amounted to $70,000. 
    • A dairy farmer was using treated waste water as a fertilizer in a land application process.  He did not comply with permitting regulations nor did he have the wastewater tested prior to application.  After several months of application, heavy metals and high counts of e-coli were found in the soils.  The farmer was required to pay remediation costs in excess of $265,000. 
    • A park served as a convenient illegal disposal site for a recycling contractor. The contractor dumped five 55-gallon drums, releasing 275 gallons of used mineral spirits into the municipal park. When the drums were dumped, the hazardous contents leaked into the soil. In addition, the contractor emptied the contents of the vacuum truck into a nearby community lake. Total cleanup expenses amounted to $475,000. 
    • The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000.  
    • A Tribal property was selected as the site for a new library. Construction was halted after the discovery of an unknown landfill location at the site. As a result of haphazard disposal techniques, there had been a wide array of materials disposed at this site. An investigation revealed that the landfill occupied about three acres and the refuse was approximately 20 feet deep. The cost to exhume all buried materials and sort them for proper disposal exceeded $1 million. Additionally, further investigation turned up soil contaminated with pesticides, total petroleum hydrocarbons and various volatile organic compounds. Soil investigations, cleanup and disposal amounted to approximately $500,000, bringing total costs to $1.5 million. 
    • A Tribal Nation had vacant land.  When they visited the property to inspect it for a development project, they discovered that some waste had been illegally disposed of on the land.  Testing of the waste showed it was a hazardous waste and the cost to the tribe to dispose of the waste was in excess of $300,000.   
    • A wastewater treatment plant pumping station had a faulty valve malfunctioned. As a result, a pipe ruptured releasing 1.5 million gallons of raw sewage into a local creek. Raw sewage traveled downstream to a larger river. The river was used by fisherman, boaters and marinas. Many boats were damaged by the sewage and marinas had to close while the waste was cleaned up. Property damage claims and loss of use of the waterway as a fishing source resulted in claims in excess of $700,000.   
    • An excavation/grading contractor unknowingly spread petroleum-contaminated soil across a project site during fill operations.  The contractor did not have contractor’s pollution liability insurance and could not afford the cost to clean up the land.  The property was owned by a tribe who had to expense $350,000 to clean up the land. 
    • When maintenance workers at a resort moved a pallet holding 300 gallons of muriatic acid, it fell and 150 gallons of the acid were spilled into the street. The acid — a pool chemical and potential lung irritant — ran down a gutter where it was stopped by firefighters. Fourteen people became ill after inhaling the fumes. Seven were treated at the scene and the others were sent to local hospitals. Later, several victims filed bodily injury claims against the resort. 

    Benefits of Environmental Liability Insurance 

    Consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy.

    The Three Main Benefits environmental liability insurance offers:  

    • 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.  
    •  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….?
    • 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 Products

    Environmental Impairment Liability (EIL)

    EIL is for Tribal Nations susceptible to economic loss caused by pollution that actually or allegedly originated from their operations.  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 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 multi year terms.  Sewer lines and pump/lift stations can be covered by EIL.  Most EIL policies cover above ground storage tanks.

    Property Transfer Coverage

    When buying, selling or condemning property there can be unknown preexisting environmental conditions. Since a Phase I or Phase II survey 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. 

    Transportation Pollution Liability 

    Generally, business auto or truckers policies will exclude pollution losses arising from spills or other releases of their 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.  Note:  An MCS-90 endorsement is not pollution coverage.  

    Underground and Above Group Storage Tanks 

    Financial responsibility requirements ensure that owners and operators of underground storage tank systems can 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 system.  

    Note:  For Tribal Nations, you have potential indirect environmental exposures from the vendors you hire to perform services.  Should your vendors cause an environmental problem or exacerbate an existing environmental issue their general liability insurance policy generally will have either an absolute or total pollution exclusion.  In order to be protected you should make sure your vendors have the proper environment insurance coverage before they do any work on your behalf.

    Contractors Pollution Liability 

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

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

    Professional Liability (E&O)

    Should an environmental engineer/consultant or analytical laboratory make an error or an omission in performing professional services for you they will need an E&O policy including pollution for there to be coverage.  Some professional services could include Phase I or Phase II site assessments, All Appropriate Inquiry (AAI), air monitoring, lead and asbestos assessments, waste characterization, remedial action plans, water testing, mold survey’s, environmental training….

  • Tool & Die Shops

    What is a Pollutant? 

    Any material, substance, liquid, product, etc… which is introduced into an environment for other than its intended use / purpose. In other words, something that ends up where it doesn’t belong. Fresh water, cheese, and milk have all been classified as pollutants by Insurance Carriers under various circumstances. 

    Most commercial insureds assume that claims arising from their operations are covered by the general liability policy. However, claims resulting from a “pollution incident” are excluded from most general liability policies, which leaves commercial insureds with gaps in coverage. What pollutants are impacting your business?

    Environmental Exposures Impacting Tool & Die Shops

    May include, but are not limited to:  Air emissions from painting and plating lines, ovens, boilers, reactors, (types of emissions include: carbon dioxide, nitrous oxides, sulfur dioxide, mercury, particulate (heavy metals and dusts), VOC (volatile organic compounds);  Spills from underground and/or aboveground storage tanks;  No secondary containment for above ground storage tanks;  Leaks from elevator hydraulic fluid storage tanks;   Waste storage/handling practices;  Hazardous waste materials (i.e. drums of spent solvents, acids, caustics, paint, heavy metal particulate and dust from bag houses and electrostatic precipitators; sludge’s from water treatment operations;  Raw materials stored and utilized in large quantities (i.e. acids, bases, compressed gases including cyanide and hydrogen chloride, diesel fuel and lubricant oils, flammable paints and solvents);  Wastewaters generated from contact and non-contact cooling water;  Plating lines;  Drum cleaning;  Products cleaning and chemical treatments (wastewaters generally contain heavy metals, oil, grease and organic compounds);  Uncontained floor drains around the plant;  Unknown abandoned underground storage tanks;  In-ground sumps and pits;  Unsealed truck ramps;  Old and/or unknown landfills and lagoons;  Uncertainties about the historical use and conditions of property;  Electroplating baths and sludge;  Paint sludge;  Inadequate or no auditing of hazardous and non-hazardous waste handlers, transporter and disposal companies;  Obsolete and remote equipment storage (bone) yards where contaminants percolate into the soil/groundwater;  Improperly maintained paint booth filters;  Nuisance odors;  Adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Refrigeration systems;  No emergency response training for employees;  Halon releases from fire suppression equipment;  Old septic systems;  Spills and leaks from the storage and handling  (loading/unloading) of material containers such as drums, totes or bags from vehicles and/or rail cars….;  Utilities that cross manufacturers property;  Corroded wastewater and storm water sewers;  Improper characterization of hazardous waste;  Non-compliance with SARA Title III/Community Right-to-Know reporting requirements;  Natural resource damages;  Asbestos or lead containing materials; Silica; mold, vapor intrusion….  

    Environmental Loss Examples

    1. During the night, an unknown party illegally placed drums of hazardous waste into a dumpster behind a tool & die shop.  The containers were not leaking, but the cost to properly dispose of the illegally dumped waste cost shop owner roughly $50,000. 
    2. While moving a large piece of equipment a forklift operator hit a hydrofluoric acid aboveground storage tank releasing dangerous fumes into the neighboring community. Area residents and businesses were evacuated and several people were treated at the local hospital for fume inhalation. Claims for bodily injury and business interruption topped $500,000. 
    3. A tool and die shop began expansion of the production line area. During excavation, oily soils with a petroleum odor were discovered. Further investigation uncovered an old, undocumented sludge-drying pit, which the previous owner used back in the 1940’s. The property owner had to remove and remediate the soils at his expense. Cleanup costs exceeded $400,000. 
    4. A tool and die shop stored bag house dust containing heavy metals in an uncovered dumpster behind the facility. Whenever it rained, storm water mixed with the dusts, forming a slurry, which ran off-site. Soil testing of a nearby stream bank showed high levels of lead, cadmium and mercury. The contaminant source was determined to be the dumpster run-off. The manufacturer was responsible for cleanup costs and natural resource damages exceeding $250,000. 
    5. An auto parts manufacturer had been removing oil and grease from their products prior to painting them. The metal goods were passed through a vapor bath of trichloronethylene (TCE), a common solvent.  During an environmental assessment it was determined the groundwater surrounding the plant contained significant concentrations of TCE and other solvents. The cleanup of the site was estimated to exceed $900,000. 
    6. Concrete trenches were used to transport plating line wastes to the on-site wastewater treatment system.  The high acidity of the wastewater degraded the trenches that allowed the wastewater to seep into surrounding soils.  Subsequently the soils and ground water were contaminated with heavy metals and solvents used in the plating process.  Testing in a nearby stream revealed that fish had high concentrations of metals in their systems as a result of the contamination.  Because fishing was prohibited a local environmental group submitted a class action suit against the platter for loss of enjoyment of the stream.  The group also submitted perceived bodily injury claims for ingestion of the contaminated fish.  Total claims exceeded $3.2 million.
    7. A manufacturer hired a waste hauler to transport their waste materials to a 3rd party disposal site. During transportation the hauler got into an accident, causing the truck to overturn and spills its load into a nearby stream.  Under CERCLA, the commercial insured must contribute for their apportionment of the load for cleanup cost since federal law states that you own your waste from cradle to grave.  Cost to settle the claim for the service station was $700,000. 
    8. A tool and die shop was sued when contamination was discovered in the drinking water at a new residential development. After further investigation, it was determined that the pollutants were not used as part of the shop’s process, and that the shop was not the source of the contamination. The shop was eventually released from the lawsuit. However, they had already expensed over $200,000 in legal defense costs. 
    9. A tool and die shop operated a machine, which was used to cut sheet metal. A portion of the machine was located beneath the floor. For more than 20 years, lubricating oil from the machines moving parts was released into the surrounding soils. When a nearby homeowner’s down gradient well used for potable water was tested, it contained total petroleum hydrocarbons. After further investigation, it was found that the tool and die shop’s property was the source of the pollutant. Total cost of remediation and 3rd party bodily injury claims exceeded $5,000,000. 
    10. The concrete secondary containment of a 10,000-gallon aboveground fuel storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The fuel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000.

    Benefits of Environmental Liability Insurance

    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. Three of the most overlooked benefits of investing in pollution liability insurance include; 

    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 Products

    Environmental Impairment Liability (EIL) 

    EIL is for manufacturers susceptible to economic loss caused by pollution that actually or allegedly originated from their operations.  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 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 clean-up costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multi-year terms.  Sewer lines and pump/lift stations can be covered by EIL.  Most EIL policies cover above ground storage tanks.

    Property Transfer Coverage

    When buying or selling property there can be unknown preexisting environmental conditions. Since a Phase I, Phase II, All Appropriate Inquiry (AAI) survey 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.  Property buyers have negotiated lower interest rates by blending property transfer coverage with their mortgage.  

    Contractors Pollution Liability (CPL)

    CPL Coverage protects the insured for pollution conditions they may cause or exacerbate while performing work at a 3rd party locations. This is for covered operations performed by or on behalf of the insured. For manufactures, CPL would cover any work they perform for their customers at their customer’s location, such as servicing, installation, and monitoring. 

    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. 

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

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

    Products Pollution Liability 

    Products Pollution Liability is for manufactures that make and/or distribute a product that if faulty could cause a pollution incident. This coverage can be written on a stand-alone policy, or included on an environmental impairment liability policy. For Environmental Insurance markets to consider offering this coverage, they typically prefer the product be intended for commercial use, as opposed to mass distribution to the general public. 

    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 system.