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  • Quarries

    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 Gravel Quarries

    May include, but are not limited to: Silica;  Stormwater runoff;  Release of oils/fuels from equipment;  Spills mobile storage tanks;  No auditing of waste handling and disposal companies;  Natural resource damages;  Vapor intrusion;  Storage and/or transportation of raw materials;  Business interruption expenses from pollution loss (1st & 3rd party);  Leaks from hydraulic fluid;  Products pollution liability;  Raw materials stored onsite;  Uncertainties about the historical use and conditions of property;  Obsolete and remote equipment storage (bone) yards where contaminants percolate into the soil/groundwater;  Nuisance odors;  No emergency response training for employees;  Spills and leaks from the storage and handling (loading/unloading) of materials from vehicles, rail cars, barges…;  Improper characterization of hazardous waste… And more      

    Environmental Claim Scenarios

    • A gravel quarry provided material for a jobsite, which contained unknown pollutants. The excavation contractor unknowingly spread the contaminated material across a project site. Later during the project, the contamination was discovered and determined to have originated from the material provided by the gravel mine. Project delays, cleanup costs, and 3rd party property damage claims exceeded $600,000. 
    • A waste hauler was hired to transport used oil and fluids to a 3rd party recycling facility. The waste hauler got into an accident which caused the contents of the tanker to be released directly into a creek.  Under Federal law (CERCLA) you own your waste from cradle to grave, so the generators of the waste had to pay their apportionment of the $2,000,000 expense for remediation. 
    • Over the weekend a major thunderstorm destroyed the storm water runoff control system at a quarry, causing the material to flow down grade through neighboring properties, roads, and into a nearby lake.  The quarry was responsible for cleanup costs, natural resource damages, and 3rd party property damage claims, which exceeded $3,500,000.  
    • 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.  Total cost for investigation, removal, and disposal exceeded $275,000. 
    • During a particularly dry spell in the summer, heavy winds allowed silica dust to drift from a quarry into a neighboring community. The liable quarry filed a claim with their GL carrier for the resulting property damage and bodily injury, but the insurer denied the claim, due to the policy’s pollution exclusion. The quarry was ultimately responsible for coving 100% of the loss, which totaled over $1,000,000. 
    • A quarries tailings piles over several years of being exposed to the elements and rain, percolated into the ground and ground water.  The soil contamination plume impacted numerous third parties and the ground water contamination plume impacted both private and municipal water wells.  Costs for remediation and other expenses had not been calculated but will be in the millions of dollars.  

    Benefits of Environmental Liability Insurance

    Because environmental losses are a severity risk, rather than a frequency risk, most commercial insureds lack the financial strength to self-insure their environmental liabilities. Since every gravel quarry has notable environmental exposures, consideration should be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy, versus self-insuring. 

    Three Overlooked Benefits of environmental liability insurance:

    • 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 Coverages

    Environmental Impairment Liability (EIL) 

    EIL is for gravel mining operations susceptible to economic loss caused by pollution that actually or allegedly originated from their owned or leased location (mine).  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.

    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.    

    Contractors Pollution Liability (CPL)

    Contractors Pollution Liability (CPL) is for gravel mining operations that perform contracting work away from any premises they own, rent, lease or occupy, should they cause or exacerbate an environmental condition while performing their contractor services.  

    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, and asbestos, defense outside the limits, off-site disposal coverage, and more. Contractors incorporating CPL coverage as part of their risk transfer strategy, drive their growth and profits by marketing the benefits CPL coverage affords in reducing job interruption due to environmental issues.  A major environmental liability exposure faced by all contractors 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?

    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 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.      

  • Pressure Cleaning 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 contractors assume that claims arising from operations are covered by the general liability policy. However, claims resulting from a “pollution incident” are excluded from most general liability policies, which leaves most contractors exposed to potentially uncovered claims. What pollutants are impacting your business?

    Environmental Exposures Impacting Pressure Cleaning Contractors  

    May include, but are not limited to: Mold;  Silica;  Asbestos;  Lead;  Spills during the loading, unloading, and transportation of cargo;  Damaging fuel tanks, hydraulic fluid lines, boilers, utilities, or other raw materials stored at customer locations;  Cleaning vehicles that contain unknown pollutants such as lubricants, which spread due to power washing;  Water run-off from jobsites;  Faulty hose hook-up and/or pump failures;  Natural resource damages;  Accidentally using contaminated water;  Vandalism;  3rd party business interruption;  Odor drifting; Vapor intrusion;  Illegal disposal of waste by 3rd parties;  Non-owned disposal site liability;  Pollution events impacting your operating facility;  Containment system failures;  Legal defense for 3rd party nuisance claims;  failure to identify or mischaracterize contamination during surveys;  exacerbation of preexisting contamination during cleanup efforts;  failure to notify public and/or EPA of contamination or releases;  hazardous air emission from incomplete abatement;  and more…

    Environmental Claim Scenarios

    1. A power washing company was sued when mold was discovered within a building they had recently worked at. The contractor was responsible remediation, 3rd party bodily injury and property damage, as well as 3rd party business interruption, as the customer had to suspend operations while the mold was being remediated. Total cost of the claim exceeded $600,000. 
    2. An emergency clean-up contractor was performing power washing services at a petroleum spill site. While working, the contractor’s containment system failed, allowing the petroleum to rush onto a neighboring property (which included a wetland). Total cost of remediation, 3rd party property damage, and natural resource damages exceeded $350,000. 
    3. A contractor used high pressure cleaning equipment to clean a building’s HVAC system. It was later found that the ductwork was home to a dangerous fungus, which spread throughout the building during the cleaning. A number of employees in the building became infected with the fungus. Some of which were critically infected. The contractor was found liable for the spread of the fungus and faced bodily injury and property damage claims in excess of $1 million.
    4. 6-months after completing a cleaning job, the customer discovered mold in their building. The customer sued the cleaning contractor for the cost of remediation. After further investigation, it was determined that the cleaning contractor was not responsible for the mold, and was removed from the suit. However, the contractor had already expensed over $20,000 in legal fees. 
    5. While cleaning above ground storage tanks, the cleaning contractor accidentally impacted a valve, which caused fuel to escape the tank and into the soil. Cost to remediate the contamination was over $75,000. 
    6. A power washing contractor was transporting equipment and materials to a jobsite and got into an accident, which caused fuel being hauled for the power washers to spill into the surrounding soils. Claims for investigation, remediation, and natural resource damages were in excess of $50,000. 
    7. While cleaning a commercial kitchen, the contractor unknowingly sprayed areas coated with lead based paint. Lucky for the contractor, the exacerbation of the lead based paint was discovered shortly thereafter. However, the total cost to remediate the lead paint was $25,000.  

    Benefits of Environmental Liability Insurance

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

    Three Overlooked Benefits of environmental liability insurance:  

    1. Defense Costs:  Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong you can still get named in a suit and have to expense defense costs i.e. legal fees, environmental investigations, etc.  
    2.  Claim Management:  All policies come with specialists to assist you in handling a claim.  Who is in charge of communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability:  The majority of the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption.  You need to look at your client’s and neighbors that can be impacted if you or a sub-contractor/vendor cause an environmental loss.          

    Environmental Liability Insurance Coverages

    Contractors Pollution Liability (CPL)

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

    CPL can be offered on a claims made or occurrence basis.  Coverage can be written on a job specific basis, or on a blanket basis to cover all the work performed by the insured.  Most policies can be endorsed to cover transportation pollution liability, mold, lead, asbestos, defense outside the limits, off-site disposal coverage, etc.  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 contractors 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?

    Transportation Pollution Liability 

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

    Environmental Impairment Liability (EIL) 

    The pollution exposures impacting your contracting work in the field are well documented, but have you considered the pollution risks impacting your owned, rented or leased operating locations? Many contractors have physical locations that support their work in the field, which can include offices, storage buildings, equipment/vehicle maintenance facilities, bulk fuel storage, outdoor storage yards, raw materials, etc. 

    Environmental Impairment Liability (EIL) is for contractors that are susceptible to economic loss caused by pollution that actually or allegedly originated from their property.  Sometimes referred to as Pollution Legal Liability (PLL), this coverage is for contractors 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.

    Professional Liability 

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

  • Port Authorities

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

    Environmental Exposures Impacting Port Authorities 

    Include, but are not limited to:  Spills/releases during loading/unloading process;  Pollutants being shipped through the port;  Illegal / midnight dumping of pollutants, fuels, waste from tenants, ships, rail road, over the road transporters, aviation operations….;  Dust & vehicle emissions;  Spills from fuels and hazardous materials stored in above ground or underground storage tanks;  Pollution from neighboring properties migrating onto Ports (Vapor Intrusion);  Tennant operations causing a pollution exposure;  Storm water runoff;  Loading and unloading of pollutants over unsealed areas;  Natural resource damages;  Acid wash for boats; Leaks from elevator hydraulic fluid storage tanks; Equipment maintenance services;  Corroded wastewater and storm water sewers;  Sick building syndrome;  Impacting underground utilities on Port property;  No auditing of waste handling and disposal companies;  Tenants using or storing environmentally sensitive materials, chemicals, waste….;  Obsolete and remote equipment storage (bone) yards where contaminants percolate into the soil/groundwater;  Releases from refrigeration systems;  Wastewater treatment plants/ lift stations/ pumping stations;  Vandalism;  Mold; Asbestos;  Lead;  Past/present use of septic systems;  Adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Janitorial cleaning compounds;  No emergency and spill control plans;  nuisance odors;  Storage and use of pesticides and herbicides;  Transfer and recycling facilities;  Painting and sanding; De-icing operations;  Brownfield’s….  Some Port’s also have golf courses, airports…. that create a variety of environmental exposures.

    Environmental Claim Examples

    1. A chemical storage area sparked a fire that forced the evacuation of neighboring businesses.  Businesses and residents within a two mile radius had to evacuate because of fumes from the chemical fire.  Local residents from miles away could hear the ‘popping sound’ of the 55-gallon chemical drums as they exploded. The hazardous nature of the chemicals, and the fumes created by the fire, necessitated the evacuation of more than 20 businesses.  Businesses remained barred from their facilities for several days while the fire was extinguished and chemicals were cleaned-up.  The Port was sued by several business and third parties for business interruption as well as property damage, clean up costs and third-party bodily injury.  Costs to settle the claims exceeded $30,000,000.
    2. A new building was built on the site of a former equipment storage area.  During excavation, petroleum hydrocarbon contamination was discovered.  Cleanup costs exceeded $400,000.
    3. A Port owned several parcels of vacant land.  When the Port visited the site to begin construction of a new building they discovered that several piles of unidentified waste had been illegally dumped on the property. The Port had the piles tested and test results showed the piles contained hazardous waste.  Cost for the Port to dispose of the waste exceeded $650,000.
    4. A Port acquired property previously used for manufacturing.  The port planed to expand their warehousing operations.  When excavation began an abandoned on site lagoon waste treatment lagoon was discovered.  The soil and had to be removed at the Ports expense.  Remediation and disposal costs exceeded $750,000.
    5. An excavation/grading contractor unknowingly spread petroleum-contaminated soil across a project site during fill operations.  The contractor and Port were named in a lawsuit for exacerbating the extent of contamination.  After lengthy deliberations, the contractor and Port were eventually removed from the lawsuit, however, they had invested $150,000 in defense.
    6. An excavation contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured and unmarked petroleum pipeline.  The contractor was forced out of business so the property owner a Port had to pay the bill.
    7. A HVAC contractor was hired to upgrade an office buildings heating system. While working in the building, the contractor failed to vent the system properly, causing a release of carbon monoxide.  Building occupants complaining of headaches and nausea were rushed to the local hospital.  As a result, several bodily injury suits were filed against the building owner in excess of $1,000,000.
    8. 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.
    9. At a Ports wastewater treatment plant pumping station, a faulty valve malfunctioned.  As a result, a ruptured pipe released 2.8 million gallons of raw sewage into a local river.  The river was used by local fisherman, recreational boaters and marinas.  Numerous boats were damaged by the sewage and marinas were forced to close temporarily while cleanup of the raw sewage took place.  The total cost of property damage and loss of income claims totaled $400,000.
    10. A Port tenant stored hazardous waste in an uncovered dumpster over an unsealed area.  Whenever it rained storm water would take some of the waste and deposit it across the land.  When the Port began building a new structure high levels of the hazardous waste was discovered in the soil.  Costs for the Port to remediate the site exceeded $450,000.
    11. An asphalt paving contractor paved a parking lot for a new commercial structure.  At the end of the day, the tack coat was sprayed onto the sub-base prior to paving. During the evening, a major thunderstorm caused the tack coat to wash off and flow into a nearby stream. The contractor was responsible for cleanup costs and natural resource damages which exceeded $200,000.  The damages caused for the contractors bankruptcy thus leaving the Port as the property owner the responsible party to pay for the damages.
    12. After performing routine engine maintenance on a tug boat used to move ships for a port, the boat mechanic accidentally attached the automatic bilge pump to the fuel line.  By the time the problem was detected more than 500 gallons of diesel fuel had been pumped into the bay.  Cost to the Port for clean up and third party property damage claims exceeded $100,000.

    ENVIRONMENTAL LIABILITY INSURANCE BENEFITS

    The majority of Port Authorities lack the financial strength to self insure their environmental liabilities.  Consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy.

    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, 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 RISK TRANSFER PRODUCTS

    ENVIRONMENTAL IMPAIRMENT LIABILITY (EIL)

    EIL is for Ports 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 and some can include underground storage tanks. EIL coverage can also be used to protect for environmental losses from tenants.

    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.  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. 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:  An MCS-90 endorsement is not pollution coverage. Coverage can also be acquired to protect against losses from water craft, rail or aircraft.

    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 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 system.

    Note:  Ports have potential indirect environmental exposures from the vendors you hire to perform services.  Should your vendors cause an environmental loss 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, 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 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….

  • Plumbing 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. What pollutants are impacting your business?

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

    Environmental Exposures Impacting Plumbing Contractors  

    Include, but are not limited to: asbestos; mercury; lead; vapor intrusion; Repair, Renovation and Painting (RRP) for child occupied facilities;  completed operations exposures including incomplete line hookup or improper system construction causing spills or emissions; fumes, emissions or spills of chemicals used during construction (finishers, sealants, adhesives, solvents, curing compounds); water contamination; raw materials stored at job sites; causing build up or release of airborne bacteria;  mold resulting from water intrusion or moisture encapsulation;  spills from mobile storage tanks;  site preparation/excavation work through preexisting contaminated soil or impacting utilities or underground storage tanks; old septic systems; raw sewage ruptures; stormwater runoff….

    Environmental Loss Examples:

    1. A plumbing contractor used a hole-saw while working at a jobsite. Unknown to the contractor, the saw punctured a water line in the building, allowing water to slowly drip from the pipe. Weeks later the property owner noticed dampness on the walls. After further investigation, the leak was discovered, along with mold that had developed. The plumbing contractor was responsible for cleanup costs totaling over $50,000.  
    2. A plumber exacerbated an existing problem while updating and re-piping a commercial site. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
    3. A school contracted plumbing work on its sewer lines. While dismantling piping, the contractor discovered a mercury spill that resulted in mercury contamination throughout the building. Costs to clean up the contamination and restore the building to its original condition was $350,000.  The plumbing contractor was named in the suit for exacerbating the mercury spill.
    4. A plumbing contractor failed to properly seal the drainpipe in a condominium building. After several days, residents began to feel light-headed. After further investigation, gasses from the sewer system were determined to be the cause of the problem.  The contractor faced several suits over bodily injury.  
    5. A plumbing contractor disposed of sealant and solvents containing toluene in a covered, enclosed dumpster after performing routine finish work. Acting like a confined space, the dumpster trapped the toluene fumes which depleted the oxygen levels. After climbing into the dumpster for unknown reasons, two young old children were overcome by fumes and died. The contractor faced a sizable claim resulting from improper disposal of the toluene. 
    6. While performing building renovations, a plumbing contractor used gas powered generators and equipment. The contractor failed to properly vent or contain the emissions from the equipment during operations. Employees working in a nearby area of the building complained of headaches, nausea and respiratory problems. The results of an air quality study concluded that the increased carbon dioxide levels in the building resulted from the construction equipment. The contractor was liable for causing building-related illnesses that resulted in multiple bodily injury claims.
    7. A plumbing contractor acting as the general contractor was responsible for overseeing a sewer rehabilitation project. During excavation of a trench, the bucket of a backhoe hit a natural gas line. This forced evacuation of the immediate area, including a small strip mall. Store owners filed loss of business claims against the contractor.
    8. During sewage installation, a plumbing contractor improperly tied in piping. This caused raw sewage to migrate into the underlying groundwater and contaminate residential wells. The contractor was faced with defense costs as well as sizeable to property damage and bodily injury claims from the residential community.

    Benefits of Environmental Insurance 

    Plumbing Contractors generally lack the financial strength to self insure their environmental liabilities.  Since every plumber 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 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 will be impacted if you or a sub-contractor/vendor create an environmental loss.    

    Environmental Liability Insurance Products

    CONTRACTORS POLLUTION LIABILITY (CPL)

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

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

    TRANSPORTATION POLLUTION LIABILITY

    Generally, commercial auto 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.    

  • Plastics Manufacturers

    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 Plastics Manufacturers

    May include, but are not limited to:  Air emissions; Vapor Intrusion;  Above and underground storage tanks;   Insufficient secondary containment for above ground storage tanks; Waste storage/handling practices;  Water and waste water treatment operations;  On site storage of raw materials;  Lubricant oils; Products cleaning and chemical treatments;   Unsealed truck ramps;  Uncertainties about the historical use and conditions of property and neighbors;  Paint sludge;  Inadequate or no auditing of hazardous and non-hazardous waste handlers, transporter and disposal companies;  Improperly maintained paint booth filters;  Nuisance odors;  Adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  No emergency response training for employees;  Halon releases from fire suppression equipment;  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 property;  Corroded wastewater and storm water sewers;  Natural resource damages;  Asbestos or lead containing materials; Silica; mold;  Storm water runoff….  

    Plastics Industry Environmental Bio

    • 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. 
    • According to the EPA, five of the top six chemicals that are regulated as hazardous waste are commonly produced during the manufacture of plastic packaging.  
    • The production of polymers includes highly reactive and explosive processes and catalysts are sometimes used to produce certain characteristics in the plastic.
    • Polymer manufacturers provide the materials that are shaped into products that we have come to depend on, i.e. plastic bags, plastic packaging, water bottles, CD disks, toys, automobile parts, furniture, epoxy, silicone and much more. Polymer manufacturing is reliant upon the petroleum industry. Since polymer manufacturers rely on a tremendous diversity of petroleum-based products, chemical and complex manufacturing processes they have numerous environmental exposures.
    • Due to the variety of hazardous chemicals used in plastic manufacturing, at both the oil refinery and plastics manufacturing stages, tight controls must be in place to ensure chemical loss is also properly mitigated.
    • Many plastics are non-degradable.  
    • Production of plastics involves the use of water for cooling and processing plastics.  The wastewater generated must be treated prior to discharge; this discharge must be permitted and meet state and local regulatory compliance. 

    Environmental Claim Scenarios

    1. A plastic manufacturer began expansion of their 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 manufacturer had to remove and remediate the soils at his expense. Cleanup costs exceeded $400,000. 
    2. A plastic manufacturer received their plastic pellets via a side track agreement.  The manufacturers unloading process allowed for the plastic pellets to find their way into the local sewer system.  Over time, the accumulation of plastic pellets clogged the sewer system and caused for sewer backups.  Property damage claims exceeded $700,000.
    3. Over the weekend, a fire ignited at a plastic manufacturing facility. Firefighters responded to the 911 call. Water used by the fire department to extinguish the flames became contaminated by a slurry like mixture from the melting materials inside the building. the high pressure hoses forced the contaminated mixture to flow off the property onto a neighboring property, which included a local stream. Emergency remediation contractors began investigating the next morning, and found that the pollutants had entered the stream and had flowed downriver into a lake. Because the fire department is immune from pollution claims while in the course of duty, the plastics manufacture was held liable for the cleanup. The insured’s fire insurance excluded pollution losses, so the insured was left to cover the loss, which included natural resource damages (including loss of aquatic life), investigation, remediation, and 3rd party business interruption claims as some local business were forced to shut down during the cleanup. Total cost of the loss exceeded $6M. 
    4. A plastics manufacturing plant was sued by a neighbor who alleged that toxic chemicals emanated from the plastics facility stored in railroad cars that have leaked or been spilled due to improper environmental management practices. The adjacent property owner contended they had been forced to purchase a new building and relocate their staff and business as a result of the contamination. Cost to the plastics manufacturer to remediate the problem along with third party claims came to $2,000,000.  The adjacent property owner also claimed their normal business operations had been interrupted and the pollution has interfered with the use and enjoyment of the property, and resulted in a diminution in their property value.  In total, the adjacent property owner was seeking damages in excess of $50,000,000.  Defense costs to date have cost the plastic manufacturer over $250,000.
    5. While moving a large metal coil, 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 $94,000. 
    6. A plastic manufacturer had several paint booths located on their premises. Over time, poor maintenance on the paint booths allowed for fumes to be released into the local community. Vapor intrusion claims for third party bodily injury and property damage from exposure to the paint fumes exceeded $450,000.
    7. The janitorial department for a plastics manufacturer inadvertently mixed environmentally friendly cleaners. The result was a toxic cloud that caused respiratory problems with employees and third parties who were in the building at the time. Defense cost exceeded $90,000 and third party bodily injury claims were in excess of $250,000.  
    8. A plastics manufacturer was sued when one of their customers experienced a pollution event, which they claimed was caused by faulty product from the manufacturer. After further investigation and litigation, it was determined that the faulty product was indeed the cause of the loss, leaving the manufacturer liable. Claims for cleanup, 3rd party property damage, and 3rd party business interruption exceeded $1.2M. 
    9. A plastic manufacturer stored a drum of caustic chemicals next to a drum of highly reactive acid. When a forklift disturbed the drums, their contents were released, causing a violent reaction. Fumes spread over the neighboring properties.  Forty plaintiffs filed three lawsuits to recover damages for injuries suffered from exposure to the air emissions, damages topped $3 million. 
    10. A plastics manufacturer had a waste hauler transporting its used 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 plastics manufacturer was $700,000. 

    Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting plastics manufacturers, pollution losses are not a frequency risk, but rather a severity risk. Since every plastics manufacturer 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.

    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 for the Plastics Manufacturers

    Environmental Impairment Liability (EIL) 

    EIL is for plastic 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. Most EIL policies cover above ground storage tanks and underground tanks can be endorsed on.

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

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

    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. 

    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.  

    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.  

  • Plastic 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 Plastic Recyclers

    May include, but are not limited to:  Air emissions;  PFAS Chemicals;  Vapor Intrusion;  Above and underground storage tanks;   Insufficient secondary containment for above ground storage tanks;  Waste storage/handling practices;  Water and waste water treatment operations;  On site storage of raw materials;  Lubricant oils;  Products cleaning and chemical treatments;   Unsealed truck ramps;  Uncertainties about the historical use and conditions of property and neighbors;  Paint sludge;  Inadequate or no auditing of hazardous and non-hazardous waste handlers, transporter and disposal companies;  Nuisance odors;  Adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  No emergency response training for employees;  Halon releases from fire suppression equipment;  Spills and leaks from the storage and handling  (loading/unloading) of material containers such as drums, totes or bags from vehicles;  Utilities that cross property;  Corroded wastewater and storm water sewers;  Natural resource damages;  Asbestos or lead containing materials;  Silica; Mold;  Storm water runoff;  Devaluation of property due to known / perceived pollution conditions; and more…  

    • 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. 
    • According to the EPA, five of the top six chemicals that are regulated as hazardous waste are commonly produced during the manufacturing and recycling of plastic packaging.  
    • Due to the variety of hazardous chemicals found in plastics, tight controls must be in place to ensure environmental conditions are properly mitigated. 

    Environmental Claim Scenarios

    1. A fire ignited at a plastic recycling facility. Water used by the fire department to extinguish the flames became contaminated by a toxic slurry like mixture from the melting materials inside the building. The high pressure hoses forced the contaminants to flow off the property, which included a local stream. Emergency remediation contractors began investigating and found that the pollutants had entered the stream and had flowed downriver into a lake. Because the fire department is immune from pollution claims while in the course of duty, the plastics manufacture was held liable for the claim, which included natural resource damages (including loss of aquatic life), investigation, remediation, 3rd party bodily injury from toxic fumes, and 3rd party business interruption claims as local business being forced to shut down during the cleanup. Total cost of the loss exceeded $6M.
    2. While moving a large metal coil, a forklift operator hit an aboveground storage tank, allowing the contents to flow out of the containment. Total cost of investigation and remediation cost the recycler over $150,000. 
    3. A plastic manufacturer stored a drum of caustic chemicals next to a drum of highly reactive acid. When a forklift disturbed the drums, their contents were released, causing a violent reaction. Fumes spread over the neighboring properties.  Forty plaintiffs filed three lawsuits to recover damages for injuries suffered from exposure to the air emissions, damages topped $3 million. 
    4. A plastic recycler operated an extrusion machine. 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 the manufacturer’s property was the source of the pollutant. Total cost of remediation and 3rd party bodily injury claims exceeded $5,000,000.
    5. A plastics 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 spills 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 over $100,000. 
    6. A plastic recycling plant was sued by a neighbor who alleged that dies stored at the facility had leaked or been spilled due to improper environmental management practices. The adjacent property owner contended they had been forced to purchase a new building and relocate their staff and business as a result of the contamination. Cost to the plastics recycler to remediate the problem along with third party claims came to $2,000,000.  The adjacent property owner also claimed their normal business operations had been interrupted and the pollution has interfered with the use of the property, and resulted in a diminution in their property value.  In total, the adjacent property owner was seeking damages in excess of $50,000,000.  Additional defense costs for the plastic recycler was an additional $250,000.
    7. A plastic recycler shipped their plastic pellets to 3rd party locations over an unsealed truck ramp.  The recycler’s unloading process allowed for the plastic pellets to find their way into the local sewer system.  Over time, the accumulation of plastic pellets clogged the sewer system and caused for sewer backups.  Property damage and cleanup claims exceeded $700,000.

    Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting Plastic Recyclers, pollution losses are not a frequency risk, but rather a severity risk. Since every Plastic Recycler 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. 

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

    Three Overlooked benefits of environmental liability insurance:

    1. Defense Costs:  Environmental liabilities are relatively new & 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:  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 for the Plastic Recyclers

    Environmental Impairment Liability (EIL) 

    EIL is for plastic manufacturers susceptible to economic loss caused by pollution that actually or allegedly originated from their operations.  Sometimes referred to as Premise Pollution Liability (PPL), 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 multiyear terms, and multiple properties can be packaged on a single policy. 

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

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

    Products Pollution Liability 

    Products Pollution Liability is for recyclers 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. 

    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.  

  • Pharmaceutical 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. What pollutants are impacting your business? 

    Environmental Exposures Impacting Pharmaceutical Companies  

    May include, but are not limited to; Air emissions;  Storm water runoff;  PFAS chemicals;  Pollution from neighboring property migrating onto yours;  Vapor intrusion;  mold, Legionella, bacteria… in air conditioning and heating systems, cooling towers…;  Sick building syndrome;  Spills or leaks from underground and/or above ground storage tanks;  Pollution cleanup and liabilities that occur after a fire;  Easements that cross the property that may leak or spill hazardous materials; Acidic laboratory and maintenance chemicals;  Natural resource damages;  Unsealed truck ramps;  Improper maintenance of laboratory hood filters;  Insufficient pretreatment of wastewater discharge to wastewater treatment plant;  Corroded wastewater and storm water sewers;  No auditing of waste handling and disposal companies;  Janitorial cleaning compounds;  Adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Halon release from fire suppression equipment;  Spills and leaks from the storage and handling (loading/unloading) of material containers such as, drums, totes, bags from vehicles or rail cars;  Onsite storage of hazardous materials;  Historical disposal practices for hazardous, infectious, medical and radioactive waste…. 

    Environmental Loss Examples

    1. A pharmaceutical company disposed of its science lab wastes in a 40-year-old, 20,000-gallon underground storage tank. The underground tank ruptured and contaminated the soil including private wells and the groundwater that flowed into a nearby reservoir. Several third parties sued the pharmaceutical company, with claims totaling $450,000. In addition, costs to clean up the reservoir amounted to $1.1 million. 
    2. In the lab of at a pharmaceutical company, experiments were being conducted in an area with a faulty ventilation system. When the system failed, toxic fumes were released outside the building. As a precaution, nearby businesses were evacuated. The pharmaceutical company was sued for several third party claims, along with a $215,000 in business interruption claims from nearby businesses that were evacuated.  
    3. A pharmaceutical company was discharging liquid lab waste into a wastewater treatment plant on the property, which was hooked-up the local municipal treatment system. When the plant failed, toxic liquids contaminated the publicly owned treatment works (POTW), forcing its temporary closure. The pharmaceutical company was charged with $2,500,000 for environmental cleanup and contingent business loss that resulted from the contamination of the POTW. 
    4. A company decided to expand their building onto the site of a former parking lot. During excavation, petroleum hydrocarbon contamination was discovered. The pharmaceutical company had no idea of the historical use of the area. Investigation and sampling pinpointed the source and extent of contamination. On-site treatment and/or cleanup costs exceeded $800,000. 
    5. A plumbing was hired to work on a lab. While dismantling laboratory piping, the contractor discovered an existing mercury spill that resulted in mercury contamination throughout the building. Costs to clean up the contamination and restore the building to its original condition were $350,000. 
    6. The concrete secondary containment of a 10,000-gallon aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons of hazardous liquid into the tank containment area. The liquid seeped into the underlying soils. Total cost for investigation, removal and disposal exceeded $320,000. 
    7. During the night, an unknown party illegally placed drums of hazardous waste into a dumpster.  The containers were not leaking, but the cost to properly dispose of the illegally dumped waste cost the company roughly $75,000. 
    8. A waste hauler was hired to transport manifested 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, commercial insureds 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 was $700,000. 
    9. While transferring products from one truck to another, a forklift operator cut a corner to tight causing the load to shift and spill.  Cost to clean up exceeded $100,000. 
    10. A fire ignited at a pharmaceutical manufacturing facility, sending hazardous vapors into the atmosphere, and hazardous liquids into the soil. A class action lawsuit was filed in the community for health problems, property damage from firewater runoff, and 3rd party business interruption. The pharmaceutical company also had to pay for the remediation of the toxic sludge that pooled in the building’s foundation as a result of the fire. The total cost of the claim exceeded $3,000,000. 

    Benefits of Environmental Liability Insurance

    Because environmental accidents/conditions are a severity risk, rather than a frequency risk, most pharmaceutical companies lack the financial strength to self-insure their environmental liabilities.  Since every pharmaceutical company is impacted by environmental liabilities, consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of their risk transfer.

    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 
    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 create an environmental loss.

    Environmental Liability Coverages 

    Environmental Impairment Liability (EIL) 

    EIL is for pharmaceutical companies 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 multiyear terms.  

    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. 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.  

    Underground & Aboveground 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.  

    Contractors Pollution Liability (CPL)

    Pharmaceutical companies 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 typically will have an absolute or total pollution exclusion.  In order to be protected you should make sure your vendors have CPL insurance coverage before they begin doing work.

    As the owner of the property you have 2 options 

    • Option #1: Require all contractors performing work on your property to carry Contractors Pollution Liability insurance. Most policies will contain language that includes blanket additional insureds. 
    • Option #2: Buy an Owner Controlled CPL policy for your project. This works the same as option #1, except you are the named insured and control the policy. Unfortunately, it’s common for a contractor to purchase CPL coverage to close the contract, only the cancel the policy shortly thereafter. By purchasing an owner controlled CPL policy, you 

  • Pallet Manufacturers & Distributors

    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 Pallet Manufacturers & Distributors 

    May include, but are not limited to:  Pollutants left behind on pallets from the materials being hauled, such as oils, greases, and other lubricants;  Pollution liabilities as a result of a fire; Waste storage/handling practices;  Air emissions;  Hazardous waste materials (i.e. drums of spent solvents, acids, caustics, paint, etc.);  Products pollution liability from a pollution incident caused due to product failure;  Products cleaning treatments;  Uncontained floor drains around the plant;  Unknown abandoned underground storage tanks;  In-ground sumps and pits;  Unsealed truck ramps;  Uncertainties about the historical use and conditions of property;  Inadequate or no auditing of hazardous and non-hazardous waste handlers, transporter and disposal companies;  Outdoor equipment storage (bone) yards where contaminants percolate into the soil/groundwater;  Nuisance odors;  Pollution liabilities as a result of a fire;  No emergency response training for employees;  Halon releases from fire suppression equipment;  Old septic systems;  Spills and leaks during the storage and handling  (loading/unloading) of material containers such as drums, totes or bags from vehicles;  Utilities that cross property;  Corroded wastewater and storm water sewers;  Improper characterization of hazardous waste;  Natural resource damages;  Asbestos or lead containing materials;  Spills from underground and/or aboveground storage tanks;  Legal defense costs for 3rd party nuisance claims;  Leaks from hydraulic fluid storage tanks and hoses;    Silica;  Mold;  Vapor intrusion;  And more…  

    Environmental Claim Scenarios

    Environmental Impairment Liability (EIL) 

    • During the night, an unknown party illegally placed drums of hazardous waste into a dumpster behind a pallet manufacturer’s facility.  The containers were not leaking, but the cost to properly dispose of the illegally dumped waste cost the manufacturer roughly $50,000. 
    • While moving a large stack of pallets, the forklift operator hit and ruptured an above ground fuel line, causing a high-pressure release. `Investigation and cleanup costs exceeded $200,000.  
    • A pallet distribution facility caught on fire. 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 “sludge” escaped the building and migrated onto to neighboring properties. The property owner was responsible for clean-up, 3rd party property damage & business interruption, and natural resource damages, which totaled over $3,500,000.  NOTE: fire departments are immune to pollution claims arising from their work while putting out fires.  
    • A pallet manufacturer performed loading/unloading of products and material over unsealed truck ramps.  Over a period of several decades, ground water became contaminated from pollutants that were released from idling trucks and storm water runoff.  The manufacturer had to pay over $1,400,000 in cleanup costs, 3rd party property damage, and 3rd party bodily injury claims. 

    Transportation Pollution Liability (TPL) 

    • A pallet manufacturer hired a waste hauler to transport their used 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 insured was $70,000. 

    Products Pollution Liability 

    • A pallet manufacturer was sued after a customer experienced a pollution loss while transporting their materials. The customer claims that it was a faulty pallet, which allowed large amounts of their products to fall of their truck and into a nearby steam. Total cost for legal defense, investigation, remediation, and natural resource damages was over $450,000. 

    Defense Costs for Nuisance Claims 

    • A pallet manufacture 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 pelleting process, nor was the pallet manufacturer’s property the source of the contamination. The manufacturer was eventually released from the lawsuit. However, they had already expensed over $100,000 in legal defense costs. 

    Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting Pallet Manufacturers & Distributors, pollution losses are not a frequency risk, but rather a severity risk. Since every Pallet Manufacturer & Distributor has 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 times the clean-up costs are far less than other costs that can arise from the loss.

    Three Overlooked benefits of environmental liability insurance:

    1. Defense Costs:  Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong you can still get named in a suit and have to expense defense costs i.e. legal fees, environmental investigations, etc.  
    2. Claim Management:  All policies come with specialists to assist you in handling a claim.  Who is in charge of communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability:  The majority of the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption.  You need to look at your client’s and neighbors that can be impacted if you or a sub-contractor/vendor cause an environmental loss.        

    Environmental Liability Insurance Products

    Environmental Impairment Liability (EIL) 

    EIL is for pallet manufacturers and distributors 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.  

    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 insureds 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 products 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.  

  • Municipalities and Public Entities

    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. What pollutants are impacting your business?

    Environmental Exposures Impacting Municipalities and Public Entities 

    Some common environmental exposures faced by public entities/municipalities include:  Wastewater treatment plants/pumping stations exposures from nuisance odor claims, raw sewage rupture, chlorine gas emissions;  Storm water runoff;  Sick building syndrome;  Asbestos;  Lead;  Mold;  Historic site conditions (i.e. old in ground tanks, surface impoundments, lagoons, clarifiers, 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;  Parts washer solvents;  Storage and use of pesticides and herbicides;  Petroleum waste products;  Vehicle and equipment storage/parking over unsealed surfaces;  Parks, lakes, rivers and open land (i.e. midnight dumping, discharge of raw sewage/industrial waste, 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;  Inadequate methane collection or venting;  Leachate;  Natural resource damages;  Uncontrolled storm water;  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;  Abandoned industrial sites within the municipality;  Contamination from cemeteries;  Poor community relations;  Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Brownfields….

    Note:  The above list is intended only to outline some typical pollution exposures common to public entities, it is not all-encompassing.  If a public entity has schools, airports, hospitals, golf courses or other operations not outlined above contact environmental Strategist, Inc. (Phone 231-256-2122) for a list of common environmental exposures.

    Environmental Loss Examples 

    1. 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. A total of 12 businesses were forced to shut down for the better part of a day. Bodily injury claims amounted to $70,000 and business interruption claims totaled $120,000.
    2. A wastewater treatment plant that was 25 years old had been upgraded several times over the years. Improper closure of an old clarifier and on-site surface impoundment had allowed gradual seepage into groundwater. These constituents contaminated the underlying groundwater, which was a potable water supply for the neighboring community. The costs for groundwater cleanup and emergency water supply for residents totaled $550,000.
    3. A local park owned by a municipality 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.
    4. 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.
    5. A municipal 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.
    6. At a newly built wastewater treatment plant pumping station, a faulty valve malfunctioned. As a result, a ruptured pipe released 2.8 million gallons of raw sewage into a local creek. Municipal workers acted quickly to stop the pipe rupture. Raw sewage traveled downstream to a larger river. The river was used by local fisherman, recreational boaters and marinas. Many boats were damaged by the sewage and marinas were forced to close temporarily while the riverbanks were cleaned up. The total cost of property damage and loss of income claims totaled $195,000.
    7. William Lee Slocum Jr., of Youngsville, Pa. has pleaded guilty in Pittsburgh U.S. District court to six counts of negligently violating the Clean Water Act when he operated the Youngsville Sewage Treatment Plant between 1983 and 1995.  The Justice Department said during that period there were repeated discharges of raw sewage and sewage sludge from the plant into Brokenstraw Creek, a tributary of the Allegheny River.  Slocum, a Pennsylvania State senator, could be sentenced to one year in prison and/or a fine of $100,000 per violation.
    8. The facilities department for a municipality hired a licensed hazardous waste transporter to pick-up and deliver three barrels of spent solvents, used for cleaning their boiler, to a treatment plant. While loading on municipal grounds, one barrel fell and spilled its con-tents, which seeped into the ground. Shortly after, twenty 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 municipality paid $1.2 million in damages and clean-up costs.
    9. A municipality hired a fiber optics company to install a network of data and voice cables. The job included directional drilling under a number of roads. While drilling, the contractor hit a fuel line and did not report it. After about 2 years, neighbors 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 municipality was held liable for damages and clean-up costs in excess of $2.7 million.
    10. A water treatment plant supplied potable water to 10,000 residents. A malfunction at the plant allowed an improperly treated volume of water to be distributed to the residents. As a result, a large number of residents became ill and several were hospitalized. The residents filed a class action suit against the water treatment company for bodily injury as well as pain and suffering.  The General Liability policy denied the claim citing the total pollution exclusion on the policy. A court awarded the residents $750,000 in damages. In addition, the water treatment plant incurred $300,000 in legal defense expenses.
    11. At a transfer station, vandals littered an area with debris and overturned drums of chemicals and maintenance fluids stored at the site. The vandalism went undetected for more than a week.  The contents of the drums seeped into on-site and off-site soils and contaminated area groundwater and residential wells. Costs for property damage claims from nearby residents and for soil and groundwater cleanup exceeded $500,000.
    12. A wastewater treatment plant maintained its own sewer lines. Due to the age of the lines, several cracks had developed over the years. These cracks had continuously leaked liquid raw sewage over many years and eventually polluted a nearby stream. Residents in the area sued the treatment plant for the cost to remediate the stream as well as loss of enjoyment of the stream.  Claims exceeded $350,000.
    13. A process tank at a wastewater treatment plant malfunctioned.  The tank discharged a large volume of untreated wastewater into a nearby stream, causing damage to aquatic life.  Several residents and environmental groups filed property damage lawsuits.

    Environmental Risk Transfer Strategies

    The majority of public entities operating today, lack the financial strength to self-insure their environmental liabilities.  Consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy.

    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 Coverages

    ENVIRONMENTAL IMPAIRMENT LIABILITY (EIL)

    EIL is for public entities 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 (TPL)

    Generally, business auto or truckers policies will exclude pollution losses arising from spills or other releases of their cargo. Broadened auto pollution liability (typicallyFormCA9948) affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo.  Note:  AnMCS-90 endorsement is not pollution coverage.

    UNDERGROUND AND ABOVE GROUND STORAGE TANKS (UST, AST)

    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 public entities, 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 (CPL)

    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 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….

  • Medical Offices

    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. What pollutants are impacting your business?

    Every medical office operating today faces numerous environmental exposures.  The following is a partial list of environmental exposures faced by medical offices or by the vendors they hire.    

    Environmental Exposures Impacting Medical Offices

    Include, but are not limited to: Sick Building Syndrome (mold, Legionnaires, vapor intrusion); Radiation; Waste water from radiology services; Pollution from neighboring properties migrating onto yours (vapor intrusion); Disposal of pharmaceuticals, Pollution cleanup and liabilities that occur after a fire;  Medical and hazardous waste; Storm water runoff (i.e. parking lots, chemicals used for landscaping…); Utility easements that cross property which may leak or spill hazardous materials; On site storage of hazardous materials / wastes; Illegal disposal practices by vendors for hazardous/medical and solid wastes;  Mercury in fluorescent lights, thermometers and other medical equipment;  Sample Pharmaceuticals stored on site;  Latex Allergies; Storage tanks used for backup power generator fuel; Leaks from elevator hydraulic fluid storage tanks; Possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire….

    Environmental Loss Examples: Medical Offices

    • A mechanical contractor removed ductwork from a medical facility’s HVAC system.  It was later determined that the ductwork was home to a dangerous fungus.  The dismantling activities and the on-site storage of dismantled ductwork caused the fungus to spread into the building.  Employees became infected with the fungus some were even critically infected.  The contractor was found liable for the spread of the fungus and had bodily injury and property damage claims in excess of $1 million.  Even though the medical facility was not at fault, they had expenses of $100,000 for legal defense and $50,000 for claims management.
    • A wastewater treatment plant that was 25 years old had been upgraded several times over the years. Improper closure of an old clarifier and on-site surface impoundment had allowed gradual seepage into groundwater. These constituents contaminated the underlying groundwater, which was a potable water supply for the neighboring community. The costs for groundwater cleanup and emergency water supply for residents totaled $550,000. 
    • A medical laboratory experienced an unknown release of mercury. The mercury was discovered several years later, after the laboratory was no longer in use, and the building had been converted to offices. Under CERCLA (Comprehensive Environmental Response, Compensation and Liability Act), the medical lab was responsible to perform the cleanup.  The medical lab faced a costly cleanup, adverse publicity, and potential bodily injury claims from the building’s current occupants.  Cost of remediation totaled more than $300,000.
    • A dental office for years let old silver fillings go down the drain that went to an onsite septic system.  Testing of a nearby stream revealed high levels of contaminants.  The source was determined to be the silver fillings in the septic system.  Cost of remediation exceeded $250,000.
    • A medical office’s maintenance staff was performing a routine check of the emergency backup power system.  The backup power generator was located on the roof of the building and the diesel fuel to run the generator was in a 5,000 gallon underground storage tank.  After testing was completed the generator was shut off but a faulty valve allowed for diesel fuel to continue to be pumped from the underground storage tank.  3,000 gallons of fuel was pumped from the tank, flowed onto the roof and down drain spouts before it was discovered.  Since there were several drain spouts the diesel fuel created several contaminated areas that had to be cleaned up.  Remediation of the ground and neighboring stream exceeded $400,000. 
    • A contractor was hired to remove a leaking underground storage tank. During the excavation they discovered they were not dealing with one tank but four.  The cost of the job more than tripled from the original estimate. 
    • 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 medical facility hired a contractor 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 hospital, claims exceeded $2.5 million. 

    Benefits of Environmental Liability Insurance 

    Unlike most liability exposures impacting medical offices, pollution losses are not a frequency risk, but rather a severity risk. For this reason, the majority of medical offices lack the financial strength to self-insure their environmental liabilities.  Since every medical office 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) aka Site Pollution Liability

    EIL will protect medical facilities for exposure to economic loss caused by pollution that actually or allegedly originated from your operations.  Sometimes referred to as pollution legal liability this coverage protects insured’s that own, rent, lease, occupy or have any other insurable interest in real property and the operations. Coverage can be written in a variety of ways addressing unknown preexisting pollution 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, some can cover underground storage tanks.

    Property Transfer Coverage

    When buying, selling or being gifted 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 is not pollution coverage.  Since CERCLA states you own your waste from cradle to grave it is critical to know who you are doing business with and if there is a spill or release of your waste, you need to have a strategy in place to address the potential liabilities.

    If you buy your products or materials FOB point of shipment, you need to give serious consideration to making sure you or the transporter is covered for a pollution loss during transit or loading and unloading of the vehicle. Many hospitals and medical facilities deal with radioactive medicines and other environmentally sensitive materials, these can be shipped by air and not vehicle. Sidetrack agreements with railroads need to address this issue.   

    Note:  For doctor’s offices, 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 one of two things – 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)

    This coverage can be purchased to meet two specific exposures. First, contractors that perform remedial activities (asbestos, lead, mold, soil or ground water remediation, emergency response) there is the standard contractor’s pollution liability (CPL) insurance coverage. This protects the insured for pollution conditions they may cause or if they 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 Pullman Regional Hospital.

    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.