Blog

  • Marinas

    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. 

    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 Marinas 

    May include, but are not limited to: Chemicals used for aquatic weed control;  Fertilizers and pesticides used for landscaping; Spills/releases during loading/unloading process;  Illegal / midnight dumping of pollutants, fuels, waste from tenants, ships, and other 3rd parties, Spills of fuels and hazardous materials stored in above ground or underground storage tanks;  Pollution from neighboring properties migrating onto Marina property (Vapor Intrusion);  Storm water runoff;  Loading and unloading of pollutants over unsealed areas (fueling operations);  Natural resource damages;  Equipment maintenance services; Corroded wastewater and storm water sewers;  Sick building syndrome;  Impacting underground utilities on Marina property;  No auditing of waste handling and disposal companies; Boat and 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;  Transfer and recycling facilities;  Fumes and wastes from Fiberglass work, Painting and sanding; Brownfield’s….and more

    Environmental Claim Scenarios

    1.  A Marina’s 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 Marina was sued by several business and third parties for business interruption as well as property damage, cleanup costs and third-party bodily injury.  Costs to settle the claims exceeded $30,000,000.     
    2. A marina placed a new building on the site of a former equipment storage area.  During excavation, petroleum hydrocarbon contamination was discovered.  Cleanup costs exceeded $400,000. 
    3. A Marina owned several parcels of vacant land.  When the Marina 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 Marina had the piles tested and test results showed the piles contained hazardous waste.  Cost for the Marina to dispose of the waste exceeded $650,000.   
    4. A marina acquired property previously used for manufacturing.  The marina planned to expand their inside boat storage.  When excavation began, an abandoned on site waste treatment lagoon was discovered.  The soil had to be removed at the marinas 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 Marina were named in a lawsuit for exacerbating the extent of contamination.  After lengthy deliberations, the contractor and Marina 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 Marina had to pay the bill.
    7. 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.  
    8. At a Port’s 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. 
    9. An asphalt paving contractor paved a parking lot.  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 lake. The contractor was responsible for cleanup costs and natural resource damages which exceeded $800,000.  The damages caused the contactor to file bankruptcy, thus leaving the marina (property owner) as the responsible party to pay for the damages.
    10. After performing routine engine maintenance on a tugboat used to move ships for a shipyard, 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 shipyard for clean-up and third-party property damage claims exceeded $100,000.
    11. The new owner of a marine supply and boat sales business was dismayed to learn that years of historic boat manufacturing and repair work had resulted in soils contaminated with lead paints and asbestos.

    Overlooked Benefits of Environmental Liability Insurance 

    Unlike most liability exposures impacting marinas, pollution losses are not a frequency risk, but rather a severity risk. Since every marina 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.

    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 Marinas 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.  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.  

    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.     

    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 Aboveground 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:  Marinas and Shipyards 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.

  • Marinas & Shipyards

    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. 

    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 Marinas & Shipyards

    May include, but are not limited to: Chemicals used for aquatic weed control;  Fertilizers and pesticides used for landscaping; Spills/releases during loading/unloading process;  Illegal / midnight dumping of pollutants, fuels, waste from tenants, ships, and other 3rd parties, Spills of fuels and hazardous materials stored in above ground or underground storage tanks;  Pollution from neighboring properties migrating onto Marina/Shipyard property (Vapor Intrusion);  Storm water runoff;  Loading and unloading of pollutants over unsealed areas;  Natural resource damages; Dust & vehicles emissions; Equipment maintenance services; Corroded wastewater and storm water sewers;  Sick building syndrome;  Impacting underground utilities on Marina or Shipyard property;  No auditing of waste handling and disposal companies; 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;  Transfer and recycling facilities;  Fumes and wastes from Fiberglass work, Painting and sanding; Brownfields….and more

    Environmental Claim Scenarios

    1.  A Marina’s 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.  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 Marina was sued by several businesses and third parties for business interruption as well as property damage, cleanup costs and third-party bodily injury.  Costs to settle the claims exceeded $10,000,000.     
    2. During the night, a fire broke out at a Marina’s storage facility. As the fire department put out the fire, their high-pressure hoses forced melting plastics, metals, insulation, roofing, chemicals, oils, and other materials to commingle within the building, creating a toxic “sludge”. Some of the toxic “sludge” escaped the building and migrated onto to neighboring properties. The Marina was held liable for all clean-up costs, 3rd party property damage, 3rd party business interruption, and natural resource damages, which totaled over $5,000,000.  NOTE: fire departments are immune to pollution claims arising from their work while putting out fires.  
    3. A Marina placed a new building on the site of a former equipment storage area.  During excavation, petroleum hydrocarbon contamination was discovered.  Cleanup costs exceeded $400,000. 
    4. 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 of the claim exceeded $320,000.  
    5. At a Port’s wastewater treatment plant pumping station, a faulty valve malfunctioned.  Thus, 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. 
    6. A Shipyard was sued when contamination was discovered in the drinking water at a new nearby residential development. After further investigation, it was determined that the pollutants were not used as part of the shipyard’s operations, and the shipyard property was not the source of the contamination, releasing them from the lawsuit. However, they had already expensed over $75,000 in legal defense fighting the claim. 
    7. After performing routine engine maintenance on a tug boat used to move ships for a shipyard, 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 shipyard for cleanup and third party property damage claims exceeded $100,000.
    8. During the night, an unknown party illegally placed drums of hazardous waste into a dumpster at a boat storage and maintenance facility. The containers were not leaking, but the cost to properly dispose of the illegally dumped waste cost the auto dealer roughly $50,000. 
    9. A Marina hired a waste hauler to transport their used oils & chemicals to a 3rd party disposal facility. During transportation, the hauler’s truck got into an accident and overturned, spilling its load.  Under CERCLA, the marina 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 marina was roughly $600,000.

    Benefits of Environmental Liability Insurance

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

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

    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 must expense defense costs (legal fees, environmental investigations, etc.)  
    •  Claim Management:  All policies come with specialists to assist you in handling a claim.  Who oversees communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    • Third Party Liability:  Most 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 businesses that are 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.  Most EIL policies cover above ground storage tanks.

    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.

    Underground & Aboveground Storage Tanks (UST)

    Financial responsibility requirements ensure that owners and operators of underground & aboveground 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)

    Contractors Pollution Liability (CPL) insurance protects the insured should they cause or exacerbate an environmental condition while performing their contractor services while operating away from any premises they own, rent, lease or occupy. For Marina’s and Shipyards, this would include services such as servicing boats at 3rd party locations. 

    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.   

  • 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 Manufacturers

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

    Environmental Claim Scenarios

    1. An auto parts manufacturer had been removing oil and grease from their products prior to painting them. The metal goods were passed through a vapor bath of trichloronethylene (TCE), a common solvent.  During an environmental assessment it was determined the groundwater surrounding the plant contained significant concentrations of TCE and other solvents. The cleanup of the site was estimated to exceed $900,000. 
    2. During the night, an unknown party illegally placed drums of hazardous waste into a dumpster behind a 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. 
    3. 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 $100,000. 
    4. A manufacturer began expansion of the production line area. During excavation, oily soils with a petroleum odor were discovered. Further investigation uncovered an old, undocumented sludge-drying pit, which the previous owner used back in the 1940’s. The manufacturer had to remove and remediate the soils at his expense. Cleanup costs exceeded $400,000. 
    5. A manufacturer stored bag house dust containing heavy metals in an uncovered dumpster behind the facility. Whenever it rained, storm water mixed with the dusts, forming a slurry, which ran off-site. Soil testing of a nearby stream bank showed high levels of lead, cadmium and mercury. The contaminant source was determined to be the dumpster run-off. The manufacturer was responsible for cleanup costs and natural resource damages exceeding $250,000. 
    6. A manufacturer operated a machine, which was used to cut sheet metal. A portion of the machine was located beneath the floor. For more than 20 years, lubricating oil from the machines moving parts was released into the surrounding soils. When a nearby homeowner’s down gradient well used for potable water was tested, it contained total petroleum hydrocarbons. After further investigation, it was found the manufacturer’s property was the source of the pollutant. Total cost of remediation and 3rd party bodily injury claims exceeded $5,000,000. 
    7. A manufacturer stored incorrectly labeled drums of raw materials used for the manufacture of dry cleaning products.  One-day neighbors noticed a thick, whitish-yellow vapor cloud emanating from the vicinity of the drums.  The fire department was called and after reading the labels on the drums, they began to spray them with water.  This caused an explosion, followed by a thick smoke cloud of sulfur dioxide.  Forty plaintiffs filed three lawsuits to recover damages for injuries suffered from exposure to the sulfur dioxide cloud.  Damages topped $3 million.
    8. Concrete trenches were used to transport plating line wastes to the on-site wastewater treatment system.  The high acidity of the wastewater degraded the trenches that allowed the wastewater to seep into surrounding soils.  Subsequently the soils and ground water were contaminated with heavy metals and solvents used in the plating process.  Testing in a nearby stream revealed that fish had high concentrations of metals in their systems as a result of the contamination.  Because fishing was prohibited a local environmental group submitted a class action suit against the platter for loss of enjoyment of the stream.  The group also submitted perceived bodily injury claims for ingestion of the contaminated fish.  Total claims exceeded $3.2 million.
    9. A manufacturer hired a waste hauler to transport their waste materials to a 3rd party disposal site. During transportation the hauler got into an accident, causing the truck to overturn and spills its load into a nearby stream.  Under CERCLA, the commercial insured must contribute for their apportionment of the load for cleanup cost since federal law states that you own your waste from cradle to grave.  Cost to settle the claim for the insured was $700,000. 
    10. An Auto parts manufacturer was sued when contamination was discovered in the drinking water at a new residential development. After further investigation, it was determined that the discovered pollutants were not used as part of the manufacturers process, nor was the manufacturer’s property the source of the contamination. The manufacturer was eventually released from the lawsuit. However, they had already expensed over $200,000 in legal defense costs. 
    11. A manufacturing company performed routine drum washing operation.  Overtime, solvent laced wash migrated through cracks in the concrete and into the subsurface soils and groundwater.  The plume of solvents traveled off site and contaminated a nearby municipal water supply well.  Costly remedial technology had to be implemented to provide drinking waste.  The municipality filed suit against the manufacturing company for cleanup costs and property damage.

    Benefits of Environmental Liability Insurance

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

    Three Overlooked benefits of environmental liability insurance:

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

    Environmental Liability Insurance Products

    Environmental Impairment Liability (EIL) 

    EIL is for manufacturers susceptible to economic loss caused by pollution that actually or allegedly originated from their operations.  Sometimes referred to as pollution legal liability this coverage is for those who own, operate, lease, or have any other insurable interest in real property and the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions.  Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site clean-up costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multi-year terms.  Sewer lines and pump/lift stations can be covered by EIL.  Most EIL policies cover above ground storage tanks.

    Property Transfer Coverage

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

    This coverage not only helps to keep the property at its maximum value, it will assist the purchaser in being able to secure the necessary financing to complete their transaction.  Property buyers have negotiated lower interest rates by blending property transfer coverage with their mortgage.  

    Contractors Pollution Liability (CPL)

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

    Transportation Pollution Liability (TPL)

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

    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 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 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.  

  • Logging 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 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 Logging Contractors  

    May include, but are not limited to: Puncturing unknown underground storage tanks or utilities;  Release of oils/fuels from equipment;  Spills from mobile storage tanks;  Excavating through and/or spreading of unknown preexisting contaminated soil;  Storm water runoff;  Puncturing unknown illegally buried drums or containers; Lead;  Asbestos;  Silica;  No auditing of waste handling and disposal companies;  Natural resource damages; Vapor intrusion;  Storage and/or transportation of raw materials;  Business interruption expenses;  Leaks from hydraulic fluid storage tanks;  And more… 

    Environmental Claim Scenarios

    • A logging contractor ruptured an unmarked gas pipe while working on a job, which created a large high-pressure release. Claims for cleanup and natural resource damages exceeded $300,000. 
    • A property owner made a deal with a logging company for a selective cut on his large private acreage, that would be completed during the winter. After returning to his property in the spring, the owner noticed vast areas where vegetation wasn’t growing back. And over the next couple months, valuable oak trees were showing signs of diminishing health. After further investigation, it was found that the logging contractor’s equipment had been leaking fuel all over the property during their month of logging that winter. Claims for investigation, remediation, 3rd party property damage, and natural resource damages cost the logging contractor over $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 $320,000. 
    • During the night an unknown party illegally placed drums of hazardous liquid at a logging contractors job site.  The containers were not leaking, but the contractor was held responsible for properly disposing of the hazardous liquid, costing the logging contractor roughly $50,000. 
    • A logging company was performing a cut during late winter. Over the weekend a major warm front and thunderstorm caused a sudden snow melt, allowing sediment from the site to flow down grade into a nearby blue ribbon trout stream. The logging contractor was held liable for natural resource damages, and 3rd party property damages filed by property owners on the stream. Total cost of the claim exceeded $1,000,000.  
    • A logging contractor hired a waste hauler to transport its used equipment oil and fluids to a 3rd party disposal site. 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 logging contractor had to pay their apportionment of the remediation costs, which totaled $450,000.     
    • A logging company routinely stored barrels of fuel, oil, anti-freeze, and other hydraulic fluids at their outdoor storage yard. While loading about 1,000 pounds of potentially hazardous products onto a truck, five barrels slipped off the fork lift releasing the contents.  Fortunately, the logging company had an emergency response plan and their quick action allowed them to contain most of the contaminants.  Cost of the additional cleanup was $70,000.
    • A contractor was subject to cleanup costs after vandals opened an onsite mobile refueling tank causing diesel fuel to be released onto virgin soil.

    Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting Logging Companies, pollution losses are not a frequency risk, but rather a severity risk. Since every Logging Company is impacted by environmental liabilities, consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy, versus self-insurance.

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

    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

    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, 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?

    Environmental Impairment Liability (EIL) 

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

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

    Transportation Pollution Liability

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

    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.  

    Incidental Professional Liability 

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

  • Landscapers

    What is a Pollutant? 

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

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

    Environmental Exposures Impacting Landscapers  

    May include, but are not limited to: Storage, transportation, improper or over application, and disposal of fertilizers, pesticides, and herbicides; storage and transportation of fuels, antifreeze, oil and hydraulic fluids;  leaking above and/or underground storage tanks;  air emissions from chemical applications; storm water runoff; vapor intrusion; spills from loading and unloading of chemicals, fuels, and supplies; overuse of irrigation or improper irrigation installation; on-site and off-site disposal of trash, garbage and other waste materials; equipment storage areas; historical contamination;  natural resource damages; improper management of protected or sensitive areas like wetlands;  vandalism; mold resulting from water intrusion or moisture encapsulation;  spills from mobile storage tanks;  release of oils/fuels as a result of vandalism; unknowingly using contaminated soil as fill;  site preparation/excavation work through preexisting contaminated soil or impacting utilities; adverse reactions and interactions of chemical compounds that accidentally commingle during a fire; siltation of streams from improper erosion control management ….

    Environmental Claim Scenarios

    1. A landscaper used treated waste water as a source for irrigation.  The waste water treatment plant did not comply with permitting regulations nor was the wastewater tested prior to releasing it to the commercial landscaper.  After several months of irrigation, heavy metals and high counts of fecal coliform were found in the soils.  The landscaper was required to pay remediation costs in excess of $265,000.
    2. A landscaper was applying fertilizers and pesticides at a job site when a nearby neighbor complained of being impacted by a chemical drift. The neighbor filed a lawsuit claiming bodily injury as a result of over application and neglect on the part of the landscaper. Because he had no CPL coverage in place, the landscaper had to expense $40,000 in legal defense costs, & was ultimately released from the suit. 
    3. A landscaper doing a large project adjacent to a small wetland and stream was fined $30,000 by the EPA and had to pay remediation costs of $150,000 for storm water runoff and stream siltation that caused environmental resource damage. The landscaper had not properly managed the grading and erosion from the property into the stream and this resulted in storm water runoff containing fertilizers, herbicides, soils, and other materials which killed of wildlife in the stream.
    4. A landscaper stored gasoline in steel underground storage tanks (UST’s) for use in tractors, lawn mowers, trucks, and other equipment. Tank corrosion led to a discharge of petroleum products, which contaminated the surrounding soil and groundwater. Remediation expenses incurred for the investigation and cleanup of the site amounted to $350,000. 
    5. A residential community received its water supply from groundwater wells. Over time, the application of herbicides, pesticides, fertilizers, and other chemicals by the landscaper for the community caused groundwater contamination. Bodily injury claims were filed by local residents for perceived injuries from drinking contaminated water. Property damage claims were filed because the groundwater system was no longer a suitable drinking source. Total claims exceeded $700,000.

    Benefits of Environmental Liability Insurance

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

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

    Three Overlooked Benefits of environmental liability insurance:

    • 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

    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 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, Business Auto or Truckers policies will exclude pollution losses arising from spills or releases of transported cargo. Transportation pollution liability affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo.  You need to strategize on your exposure to transportation.  How are goods received?  FOB point of Shipment or FOB point of delivery?  Do not be confused by thinking the MCS-90 endorsement is auto pollution liability coverage.  

    Environmental Impairment Liability (EIL) 

    EIL is for contractors that own, rent, lease, operate or have any other insurable interest in real property that can be susceptible to pollution liabilities that actually or allegedly originated from the insured property. Coverage can include: Pre-existing unknown pollution; new pollution conditions;  first party on-site clean up;  third party bodily injury, property damage, business interruption and extra expense; offsite cleanup costs;  legal defense expenses;  transportation pollution liability;  offsite disposal coverage….  Multi year term policies can be negotiated. 

    Underground Storage Tanks 

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

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

    Incidental Professional Liability 

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

  • HVAC 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 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 HVAC Contractors 

    May include, but are not limited to: excavating through and spreading of unknown preexisting contaminated soil; storm water runoff; mold; lead; asbestos; HVAC causing build up or release of airborne bacteria;  ground water contamination; completed operations exposures including incomplete line hookup or improper system construction causing spills or emissions; impacting underground utilities; puncturing unknown underground storage tanks; silica; no auditing of waste handling and disposal companies; natural resource damages; vapor intrusion, Legionella…

    Environmental Claim Scenarios

    • During the installation of a geothermal heat pump system, the HVAC contractor punctured an unmarked natural gas line causing gas to release from the pipe. Due to safety concerns, local authorities ordered the evacuation of businesses and homes within a 2-block radius while the situation was being handled. Claims for clean-up and 3rd party business interruption expenses were filed, which totaled over $200,000. 
    • A mechanical contractor installed a heating, ventilation, and air conditioning system in a new commercial office building. After three years, mold and mildew growth caused the release of airborne bacteria throughout the entire building, resulting in poor indoor air quality. Claims against the contractor for bodily injury and loss of property use exceeded $500,000. In addition, the contractor was responsible for decontaminating the HVAC system.
    • Several office employees became ill from legionella. The cause of the legionella was the improper sealing of the ducts during the installation of a new HVAC unit which allowed condensation to build up.  The employees sued the property owner and the contractor.
    • A mechanical contractor removed ductwork from a hospital’s HVAC system. It was later determined that the ductwork was home to a dangerous fungus. The dismantling activities and the on-site storage of dismantled ductwork caused the fungus to spread into the hospital. Patients became infected with the fungus; some were even critically infected. The contractor was found liable for the spread of the fungus and faced bodily injury and property damage claims in excess of $1 million.
    • An HVAC contractor was sued when mold was discovered in a commercial building recently worked on by the contractor. After further investigation, the contractor’s work was not the cause of the mold growth. The contractor was removed from the suit, after having to expense over $40,000 defending the claim. 
    • A mechanical contractor installed an HVAC system in an assisted living facility for seniors.  The system was constructed improperly, which caused mold growth in a portion of the residences.  The facility was forced to relocate several patients during the repair of the system, and the renovation of the moldy building materials.  A claim for clean-up costs, property damage, and 3rd party business interruption was filed.
    • While working on a historical property, a contractor used a hole saw to cut through a ceiling. Unknown to the contractor, the saw inadvertently disturbed and released asbestos-containing insulation material. The contractor had to pay cleanup costs for the asbestos fibers released throughout the building, costing in excess of $75,000. 
    • An HVAC contractor installed a new ventilation system as part of the renovation of a 25 story office building.  An electrical fire broke out in the building’s basement two years after the renovation was complete.  As the fire burned, ventilation shafts pumped PCBs and dioxins throughout the building.  The contractor was later held liable for a large portion of the more than $40 million cleanup costs, since ventilation shaft openings were found to be too close to transformer equipment.

    Overlooked Benefits of Environmental Liability Insurance

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

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

    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

    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. 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 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.  

    Environmental Impairment Liability (EIL) 

    EIL is for contractors that own, rent, lease, operate or have any other insurable interest in real property (i.e. an operating facility that may include onsite equipment storage, fuel tanks, offices, etc.) that can be susceptible to pollution liabilities that actually or allegedly originated from the insured property. 

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

    Transportation Pollution Liability

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

    Incidental Professional Liability 

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

    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.  

  • Outfitters and Hunting, Fishing & Sportsman Clubs

    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?

    Common environmental exposures encountered with hunting and fishing clubs/outfitters include, but are not limited to:   Natural resource damages;  Pollution cleanup and liabilities that result after a fire is put out;  Use of herbicides, pesticides (Glyphosate), fertilizers…:  Storm water runoff;  Historical pollution from mining, landfills, manufacturing, government facilities, agriculture, scrap yards, old equipment bone yards;  Lead contamination at shooting range impacting soil and groundwater;  Illegal disposal of waste;  Improper treatment and/or disposal of sanitary wastewater facilities;  Fuel spills from recreational equipment;  Underground or above ground storage tank leaks causing water and soil contamination;  Abandoned underground storage tanks especially those of which the site owner is unaware or those which have been improperly closed;  Lead paint;  Asbestos;  Fueling boats in the water;  No auditing of waste handling and disposal companies;  Improper management of protected or sensitive areas such as wetlands;  Siltation of nearby streams, rivers, or lakes;  Improper erosion control management;  Electrical equipment containing toxic PCBS;  Old, abandoned wells which are not properly closed and serve as an open conduit for groundwater contamination;   Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Old septic systems;  Pressurized gas cylinders;  Spills from loading and unloading of raw materials;  Pollution from neighboring properties migrating onto yours;  Easements that cross the property which may leak or spill hazardous materials;  Residual contamination such as fertilizers or pesticides from past farming or similar uses;  Previous spills of hazardous materials from adjacent roads or railways due to truck or train accidents;  Corroded wastewater and storm water sewers;  Improper purging of bilge waters from marine vessels; spills and air emission from power generators;  Mold / legionella….

    Sportsman Clubs Environmental Loss Examples 

    1. A Hunting Club in a remote area, the owner discovered several piles of unidentified waste that had been dumped on the property. The Club had the piles tested, at a cost of several thousand dollars. The piles contained hazardous waste.  The Club owner’s cost to dispose of the waste was estimated to exceed $200,000.
    2. Clean Property; Phase I and Phase II environmental assessments involve limited sampling of a property and cannot guarantee that the property is clean. For example, a hunting/fishing business, acquired property previously used for farming.  An environmental consultant was hired to conduct a Phase I Environmental Assessment. The property was determined to be “clean.”  However, during excavation for a building, 100 drums of buried pesticides and herbicides were unearthed. The chemicals contaminated the soil and had to be removed.  Remediation and drum disposal costs exceeded $450,000
    3. A hunting / fishing business in their maintenance garage changed the oil for its equipment over a drain leading to an on-site septic system.  Over a period of many years the oil breached the septic field and migrated to neighboring properties.  When contamination was discovered in a nearby well investigations determined the contamination was coming from the hunting / fishing septic field.  Site remediation and installation of a groundwater recovery system exceeded $6000,000.
    4. Upstream from a fishing lodge 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 stream. 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.
    5. A fishing camp operated its own on-site wastewater treatment facility. Seals on the bottom of the treatment system leaked and wastewater overflowed from the top of the system. This caused numerous discharges of contaminated effluent to enter the soil and migrate into the nearby lake.  The EPA cited the fishing camp for various discharge violations and issued an administrative order finding the fishing camp responsible for contamination of the adjacent properties. Government mandated cleanup costs exceeded $250,000. In addition, neighboring property owners filed claims against the fishing camp for property damage, business interruption and trespass of pollutants. The combined total of the civil suits exceeded $500,000.
    6. A fishing camp stored fuel for their boats in an above ground 5,000-gallon storage tank.  The tanks secondary containment was cracked and a leak from the storage tank breached the secondary containment allowing more than 1,000 gallons of fuel to be released into the environment.  Cost for remediation exceeded $250,000.
    7. A sportsman club had to pay for remediation and supply potable water to residents when it was determined that lead from their shooting range via stormwater runoff had leached into the groundwater over a period of many years.  Remediation and third-party claims for bodily injury exceeded $1,000,000.
    8. A hunting and fishing guide service, during the summer season, had several customers complain of headaches and nausea.  Investigation revealed several sleeping cabins had water leaks from several sources (plumbing, open windows during storms…) that allowed for mold to develop.  Cost to remedy the issue exceeded $75,000.  
    9. A hunting club had a fire at their main lodge.  Once the fire department put out the fire thousands of gallons of contaminated residue from the fire entered the lake on which the club was located.  Natural resource damages and cost to remediate the land exceeded $200,000.

    ENVIRONMENTAL LIABILITY INSURANCE BENEFITS

    Sportsman’s clubs generally lack the financial strength to self-insure their environmental liabilities.  Since every commercial contractor 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, 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 hunting and fishing businesses 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.  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… site assessments 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. 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 and Above Ground Storage Tanks (UST, AST)

    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.

    Vendor Insurance Coverages

    If you hire contracting services i.e. mechanical / equipment repair, general construction, HVAC, plumbing, electrical, roofing…, landscaping, herbicide & pesticide application…, pool maintenance… you should confirm the vendor has contractors pollution liability coverage.  

    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, owner controlled or 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. 

    If the vendor is a transporter refer to transportation pollution liability above.

  • Hotels & Resorts

    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 Hotels & Resorts 

    May include, but are not limited to:  Storm water runoff;  Natural resource damages;  Pollution from neighboring properties migrating onto yours;  Vapor intrusion;  Meth labs;  Pollution cleanup and third party liabilities that occur after a fire;  Wastewater treatment plants/pumping stations, exposures from nuisance odor;  Raw sewage backup or rupture;  Sick building syndrome;  Asbestos;  Lead;  Mold / Legionella;  Historic site conditions;  Chemicals stored and used for pool and spa facilities; Aboveground and/or underground storage tanks;  Leaks from elevator hydraulic fluid storage tanks; Storage and use of pesticides (Glyphosate) and herbicides; Spills/releases during loading/unloading operations from trucks or other delivery devices;  Waste handling and disposal operations;  No auditing of waste handling and disposal companies;  Possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire; Maintenance/Service garages;  Generators for backup power;  Language barriers with employees;  Easements that cross the property which may leak or spill hazardous materials;  Impacting underground utilities during construction;  Release of pollutants during a convention or special event;  Janitorial cleaning compounds;  No emergency and spill control plans; Brownfields….

    Environmental Claim Scenarios

    1. A chlorine release from a wastewater treatment plant at a resort resulted in toxic air emissions. Resort guests, area residents and businesses were evacuated, and several people were hospitalized for inhalation of fumes. Bodily injury claims amounted to $70,000 and business interruption claims totaled $120,000. 
    2. Several hotel guest complained of air in the hotel that was making them nauseous.  Hotel security discovered a meth lab operating in one of the hotel rooms.  Emergency responders were called in to properly handle and dispose of hazardous materials.  Clean up costs, remodeling, third party bodily injury claims exceeded $100,000- and first-party business income was in excess of $60,000.
    3. A new hotel had construction halted after the discovery of an abandoned unknown surface lagoon used by a past property owner as part of their manufacturing operations.  As a result of haphazard business practices by the former owner, there were a wide array of waste materials disposed at the site. An investigation revealed that the waste materials covered about two acres.  The cost to remediate the site exceeded $2 million. 
    4. Maintenance workers were unloading a tote holding 400 gallons of muriatic acid which is used as a pool chemical.  The tote was dropped releasing 150 gallons of the acid which ran into a nearby storm sewer.  The acid caused an aquatic life die and other natural resource damages.  Remediation costs and natural resource damages exceeded $400,000.
    5. A major fire breakout and the fire department’s high-pressure hoses forced melting plastics, metals, insulation, roofing, drywall, chemicals, and other materials to build up inside the building’s foundation, creating a toxic “sludge”. Some of the “sludge” escaped the building and migrated onto to neighboring properties. The hotel 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.  
    6. During a medical convention, one of the vendors with a booth that supplied medical gasses had a faulty valve release anesthesia.  Attendees had to be evacuated and the convention shut down while emergency responders cleared the air.  Several people needed medical attention.  Cost for emergency responders, bodily injury claims and business interruption for the convention exceeded $125,000.  
    7. A dairy farm had a pipe break on their manure lagoon releasing in excess of 250,000 gallons of raw manure into a nearby stream.  The stream went through a resort where it then emptied into the ocean.  The smell from the manure in the stream caused the hotel to relocate guests.  Business income for the hotel was in excess of $2,500,000.  
    8. Legionella was discovered in the water supply of a resort.  The resort hotel had to be vacated while their water system went through treatment for the Legionella.  In addition to the remediation costs, several guests sued the resort claiming bodily injury from exposure to Legionella.  
    9. 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. 
    10. A maintenance employee could speak English but they could not read English.  The employee accidentally mixed a hazardous chemical with a cleaning solvent which created a hazardous vapor cloud.  The building had to be evacuated and several people were treated for inhalation of the toxic fumes.  Remediation and bodily injury claims exceeded $1,000,000.   
    11. The presence of Legionella was detected in the hot water system of a resort.  The state health department got involved and a consultant was hired to investigate and remediate the property.  A claim was made immediately for the remediation and what could have been an extensive and lengthy remediation process was completed efficiently – significantly reducing the length of business interruption for the resort owners. 

    Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting Hotels & Resorts, pollution losses are not a frequency risk, but rather a severity risk. Since every Hotel & Resort 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 the clean-up costs are far less than other costs that can arise from the loss.

    Overlooked benefits of Environmental Liability Insurance:

    1. Defense Costs:  Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong you can still get named in a suit and must expense defense costs i.e. legal fees, environmental investigations, etc.  
    2. Claim Management:  All policies come with specialists to assist you in handling a claim.  Who oversees communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability:  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 Hotels & Resorts susceptible to economic loss caused by pollution that actually or allegedly originated from their operations.  Sometimes referred to as pollution legal liability this coverage is for those who own, operate, lease, or have any other insurable interest in real property and the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions.  Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site 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 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 trucker’s policies will exclude pollution losses arising from spills or other releases of their cargo. Transportation pollution liability affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and overturn of transported cargo.  Note:  An MCS-90 endorsement is not pollution coverage.  

    Underground and Aboveground 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.  

    Contractors Pollution Liability (CPL)

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

  • Hospitals & Medical Facilities

    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 Hospitals & Medical Facilities 

    May included, but are not limited to: Legionnaires;  Air emissions from medical waste incinerators;  Spills or leaks from aboveground/underground storage tanks and piping;  Sick building syndrome;  Vapor intrusion; PFAS Chemicals;  Bacterial or infectious air releases from faulty HVAC systems;  Pollution liabilities and clean up that occur after a fire;  Air release from on-site refrigeration systems;  Sewer and septic system contamination from the disposal of laboratory wastes, pharmaceuticals and chemicals into sinks, Leaks from elevator hydraulic fluid storage tanks;  Historical contamination;  Easements that cross property which may leak or spill hazardous materials;  Janitorial cleaning compounds;  Asbestos;  Lead;  Inadequate hazardous and infectious waste management program;  Property donated or purchased;  Spills and leaks from the storage and handling (loading and unloading) of materials / supplies…;  Laundry Operations;  Illegal disposal practices by vendor’s for hazardous, medical and radionuclide wastes;  Incomplete incineration of harmful biological materials, plastic bags, petri plates, tubing;  Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire; Radioactive material in equipment and medications:  Mercury in fluorescent lights, thermometers;  Parking lots and garages….

    Environmental Claim Scenarios

    1. A mechanical contractor removed ductwork from a hospitals HVAC system.  It was later determined that the ductwork was home to a dangerous fungus.  The dismantling activities and the on-site storage of dismantled ductwork caused the fungus to spread into the hospital.  Patients became infected with the fungus some were even critically infected.  The contractor was found liable for the spread of the fungus and had bodily injury and property damage claims in excess of $1 million.  Even though the hospital was not at fault, they had expenses of $100,000 for legal defense and $50,000 for claims management.
    2. A hospitals 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 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.
    4. A medical facility 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.
    5. A medical facility hired a consultant that failed to delineate wetlands on property, which was to be developed into a new medical professional building. As a result, the medical building had to be re-engineered, thus delaying its opening. The settlement amounted to $2 million.
    6. A street and road contractor was hired to apply a sealing coat to a new concrete parking garage next to a hospital.  During the application of the sealant, fumes migrated into the hospitals air intake system.  Several patients and hospital staff were overcome by fumes and became ill.  Lawsuits were filed alleging bodily injury and asserting damages in excess of $1,000,000.  
    7. Legionella was discovered in the water supply of a major metropolitan hospital.  An entire wing of the hospital needed to be vacated and patients removed while the water system went through treatment for the Legionella.  In addition to the remediation costs, several patients sued the hospital claiming bodily injury from exposure to Legionella.  
    8. A mechanical contractor was hired to perform HVAC repairs at a hospital.  No medical procedures were performed during the actual renovation activities and proper measures were taken to ensure proper encapsulation.  Despite the controls, one year after completion of the project, the contractor was notified that several aspergillus (a type of mold species) infections had occurred several months after valve replacement surgeries.  Internal and government investigation identified the source as the hospital operating room shortly after the renovation.  The hospital was sued by several of the patients sustaining secondary infections.  The hospital and the contractor contributed to settle the claims.

    Underground & Above Ground Storage Tank Loss Examples

    1.   A hospitals maintenance staff was performing a routine check of the emergency backup power system.  The backup power generator was located on the roof of the hospital 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. 
    2. 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. 
    3. The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000. 
    4. A contractor was hired to remove two underground storage tanks and associated contaminated soil. During storage tank removal, the contractor’s backhoe hit a natural gas pipeline causing an explosion. Third parties filed bodily injury claims against the contractor, as well as the hospital, claims exceeded $2.5 million. 

    Benefits of Environmental Liability Insurance 

    Unlike most liability exposures impacting hospitals, pollution losses are not a frequency risk, but rather a severity risk. For this reason, many hospitals lack the financial strength to self-insure their environmental liabilities.  Since every hospital 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.

    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 Impairments Liability (EIL) aka Site Pollution Liability 

    EIL is for hospitals and medical facilities 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 multiyear terms.  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 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.   

    Underground & Above Ground 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.  Several states offer tank funds.  It is necessary to make sure if your state has a tank fund that is financially sound and the time it takes to get reimbursed.  

    Note:  For hospitals and medical facilities, 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 this insurance coverage before they begin doing work.

    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. 

  • Highway Construction 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 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 Highway Construction Contractors 

    May include, but are not limited to: puncturing unknown underground utilities; release of oils/fuels from equipment; spills from mobile storage tanks; excavating through and/or spreading of unknown preexisting contaminated soil; using unknown contaminated soil as fill; storm water runoff; puncturing unknown illegally buried drums or containers; lead; asbestos; silica; no auditing of waste handling and disposal companies; natural resource damages; vapor intrusion; storage and/or transportation of raw materials; business interruption expenses; leaks from hydraulic fluid storage tanks; legal defense for 3rd party nuisance claims; illegal disposal of waste by 3rd parties at jobsites (midnight dumping); and more… 

    Environmental Claim Scenarios

    1. A highway construction contractor was preparing the site at a road construction project. Over the weekend, a major thunderstorm destroyed the storm water runoff control system, allowing sediment and fill materials to flow down grade through neighboring properties, roads, and into a nearby lake.  The contractor was responsible for cleanup costs and natural resource damages, which exceeded $2,000,000.  
    2. During a highway renovation project, dry weather and high winds produced substantial amounts silica dust, which drifted onto a nearby school property. Several students and facility members sued the contactor for bodily injuries. The contactor reported the claim to their GL carrier. However, the claim was denied due to the policy’s total pollution exclusion, leaving the contractor responsible for 100% of the loss.
    3. While setting up concrete forms at a road renovation site, the contractor accidentally drove a rebar stake through an unmarked underground pressurized fuel line, creating a high-pressure release. Due to safety concerns, local authorities evacuated a 2-block radius around the accident while it was being contained, shutting all businesses down within that radius. Total cost of the claim exceeded $1,500,000 for cleanup, and 3rd party business interruption expenses incurred by local businesses forced to temporarily evacuate. 
    4. A highway contractor’s 2,500-gallon diesel mobile storage tank was accidentally punctured by an excavator, allowing over 1,000 gallons to release from the tank.  Total cost for investigation and remediation exceeded $90,000. 
    5. A highway construction contractor was preparing the site for an early spring road renovation project. Unknown to the contractor, they had several machines that were leaking diesel fuel at the jobsite. Months later, large areas of ground wouldn’t grow grass. After investigation, the leaked diesel fuel was discovered in the soils. Total cost for investigation and remediation cost the contractor over $150,000. 
    6. While transporting material to a job, a concrete contractor got into an accident, causing most for their material to spill and enter a nearby stream. Costs for remediation and natural resource damages totaled over $150,000.     
    7. A road excavation contractor unknowingly spread petroleum-contaminated soil across a road improvement project site during fill operations. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor was eventually removed from the lawsuit. However, they incurred $50,000 in defense costs fighting the claim. 
    8. During the construction of a highway overpass, the crane used to lift concrete barriers overturned. The accident ruptured the crane’s hydraulic hoses, spilling all its fluid onto the ground. The contractor was required to pay clean-up costs from the spill.
    9. A road contractor was hired to apply a sealing coat to a new concrete garage next to a hospital.  During the application of the sealant, fumes migrated into the hospitals air intake system.  Several patients and hospital staff were overcome by the fumes and became ill.  Lawsuits were filed alleging bodily injury and asserting damages in excess of $1,000,000.
    10. A contractor was subject to cleanup costs after vandals opened an onsite mobile refueling tank causing diesel fuel to be released onto virgin soil.

    Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting Highway Construction Contractors, pollution losses are not a frequency risk, but rather a severity risk. Since every Highway Construction Contractor 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 the clean-up costs are far less than other costs that often arise from the loss. 

    Overlooked Benefits of Environmental Liability Insurance:

    1. Defense Costs: Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong you can still get named in a suit and must expense defense costs i.e. legal fees, environmental investigations, etc.  
    2.  Claim Management: All policies come with specialists to assist you in handling a claim.  Who oversees communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability: Most of the time the cost to clean up the environmental problem(s) is far less than the associated claims that come in from 3rd 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 cause an environmental loss.          

    Environmental Liability Insurance Coverages

    Contractors Pollution Liability (CPL)

    CPL protects the insured during covered contacting operations, performed by the insured or on their behalf, should they cause or exacerbate an environmental condition while performing work at 3rd party (customer) locations (i.e. away from any premises the insured owns, rents, leases or occupies). 

    Coverage can be written on a blanket basis to cover all the work performed by the insured, or on a job specific basis.  Most policies can be endorsed to cover transportation pollution liability, mold, lead, and asbestos, defense outside the limits, off-site disposal coverage, and more. 

    Contractors incorporating CPL coverage as part of their risk transfer strategy, drive their growth and profits by marketing the benefits CPL coverage affords in reducing job interruption due to environmental issues. A major environmental liability exposure faced by all contactors lies in who they are doing business with.  If there is an environmental loss at a job site, innocent contractors can and do get named in lawsuits.  Do your subs/vendors have CPL insurance if they cause an environmental loss?

    Transportation Pollution Liability

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

    Premise Pollution Liability (PPL)

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

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

    Incidental Professional Liability 

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