Blog

  •  Golf Courses

    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 Golf Courses

    May include, but are not limited to: Natural Resource Damages;  PFAS Chemicals;  Over application of fertilizers, herbicides, pesticides (Glyphosate);  Stormwater Runoff;  Improper storage of batteries and raw  materials/chemicals/fuels/lubricants/anti-freeze;  Leaking underground or above ground storage tanks; Vandalism;  Equipment storage areas where oils and other contaminants percolate into the soil and ground water;  Bodily injury and property damage to neighboring properties;  Absence of comprehensive and coordinated spill control plans;  uncertainties about the historical use and conditions on the property;  Contamination from neighboring properties migrating onto yours;  Improper onsite waste storage;  No auditing of waste handling and disposal companies;  Use of fill materials which contain unknown contaminants;  Pollution cleanup and liabilities as the result of a fire;  Air emissions from onsite refrigeration systems;  Sick building syndrome;  Vapor Intrusion;  Drums / totes… stored in unsecured areas with no secondary containment;  Old septic systems;  Nuisance odors;  Spills and leaks from the storage and handling  (loading/unloading) of material containers such as drums, totes or bags from vehicles;  Corroded wastewater and storm water sewers;  Failure or overflow from on site waste water treatment facilities;  Failure of backup generator for waste water treatment facilities;  Easements/utilities that cross the property that may leak or spill hazardous materials;  Hazardous materials from adjacent roads or railways due to truck, train, barge accidents; Old, abandoned wells which are not properly closed and serve as an open conduit for soil and ground water contamination;  Improper management of protected or sensitive areas such as wetlands;  Excavation through and spreading of unknown pre-existing contaminated soil;  Impacting ground water from drilling and excavation work;  Impacting underground utility lines/services or other underground structures;  siltation of nearby streams and other bodies of water from improper erosion control management; Legionella / mold….

    Environmental Claim Scenarios 

    1. A residential community located adjacent to a golf course received its water supply from groundwater wells. Over time, the application of herbicides, pesticides, and fertilizers caused groundwater contamination. Bodily injury claims were filed by 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 $1,500,000. 
    2. A convention taking place at a golf resort was disrupted and forced to relocate because of the odor from an onsite wastewater treatment plant. A suit in the amount of $100,000 was filed against the golf resort for loss of enjoyment and for costs to relocate the convention. 
    3. The concrete secondary containment of a 10,000-gallon gasoline aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The gasoline seeped into the underlying soils and required costly excavation and removal. The total cost for investigation and remediation exceeded $220,000.  
    4. A golf course stored gasoline in steel underground storage tanks (UST’s) for use in tractors, lawn mowers and golf carts. 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 golf course sent all of its waste golf cart batteries to an off-site facility for disposal. Over a period of several years, the facility did not adhere too applicable federal and state environmental regulations, and the golf course was found jointly liable for pollution conditions caused by the battery disposal facility. The settlement for cleanup exceeded $175,000. 
    6. A golf course was being constructed on a former municipal landfill. During construction, a subsurface methane gas vent pipe collapsed. The collapsed pipe caused a dangerous buildup of methane in the neighboring residential community. Neighbors were forced to evacuate their homes, and they submitted bodily injury, property damage, loss of value and trespass claims against the course owners in excess of $1,000,000. 
    7. During excavation for a foundation, an unknown underground storage tank containing oil was ruptured.  Hundreds of gallons poured out before the rupture was closed.  Since the excavator did not have contractor’s pollution liability coverage, the property owner had to pay for remediation costs in excess of $80,000.
    8. An electrical contractor was hired to upgrade a buildings electrical system.  During trenching operations, a backhoe hit a natural gas pipeline causing an explosion. Third parties filed bodily injury claims against the contractor, as well as the resort whose club house was destroyed in the explosion. Claims exceeded $4.5 million. 
    9. A golf course 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 golf course.  After several months of irrigation, heavy metals and high counts of fecal coliform were found in the soils.  The golf course was required to pay remediation costs in excess of $265,000.
    10. 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

    Because environmental losses are a severity risk, rather than a frequency risk, the majority of golf courses lack the financial strength to self-insure their potential environmental liabilities. For this reason, golf courses should consider to the economies of scale afforded with environmental liability insurance as part of their risk transfer strategy, versus self-insuring. 

    Additionally, 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 often associated with a pollution event. 

    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….?
    • 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 golf courses 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.

    Underground Storage Tanks

    Financial responsibility requirements ensure that owners and operators of regulated 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. 

    Transportation Pollution Liability (TPL)

    Generally, Commercial Auto 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 overturn of transported cargo. 

    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. 

    Contractors Pollution Liability (CPL)

    Golf courses have potential indirect environmental exposures from the service vendors & contractors they hire to perform work on their behalf.  CPL insurance protects real estate owners / developers should their vendors cause or exacerbate an environmental condition. 

  • Golf & Ski Resorts

    What is a Pollutant? 

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

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

    Environmental Exposures Impacting Golf & Ski Resorts

    May include, but are not limited to: Natural Resource Damages;  PFAS Chemicals;  Over application of fertilizers, herbicides, pesticides (Glyphosate);  Stormwater Runoff;  Improper storage of batteries and raw  materials/chemicals/fuels/lubricants/anti-freeze;  Leaking underground or above ground storage tanks; Vandalism;  Equipment storage areas where oils and other contaminants percolate into the soil and ground water;  Bodily injury and property damage to neighboring properties;  Absence of comprehensive and coordinated spill control plans;  uncertainties about the historical use and conditions on the property;  Contamination from neighboring properties migrating onto yours;  Improper onsite waste storage;  No auditing of waste handling and disposal companies;  Use of fill materials which contain unknown contaminants;  Pollution cleanup and liabilities as the result of a fire;  Air emissions from onsite refrigeration systems;  Sick building syndrome;  Vapor Intrusion;  Drums / totes… stored in unsecured areas with no secondary containment;  Old septic systems;  Nuisance odors;  Spills and leaks from the storage and handling  (loading/unloading) of material containers such as drums, totes or bags from vehicles;  Corroded wastewater and storm water sewers;  Failure or overflow from on site waste water treatment facilities;  Failure of backup generator for waste water treatment facilities;  Easements/utilities that cross the property that may leak or spill hazardous materials;  Hazardous materials from adjacent roads or railways due to truck, train, barge accidents; Old, abandoned wells which are not properly closed and serve as an open conduit for soil and ground water contamination;  Improper management of protected or sensitive areas such as wetlands;  Excavation through and spreading of unknown pre-existing contaminated soil;  Impacting ground water from drilling and excavation work;  Impacting underground utility lines/services or other underground structures;  siltation of nearby streams and other bodies of water from improper erosion control management; Legionella / mold….

    Environmental Claim Scenarios

    1. Maintenance workers at a resort were unloading 400-gallon totes of muriatic acid, which is used as a pool chemical.  One of the totes was dropped, releasing 150 gallons of the acid which ran into a nearby storm sewer.  The acid caused aquatic life to die and other natural resource damages.  Remediation costs and natural resource damages exceeded $400,000.
    2. While remodeling rooms at a hotel resort, contractors discovered mold within the building’s walls and ceilings. After further investigation, mold was also found throughout the property. Cost to remediate the mold and lost rental revenues during remediation cost the resort over $600,000. 
    3. A residential community located adjacent to a golf course received its water supply from groundwater wells. Over time, the application of herbicides, pesticides, and fertilizers caused groundwater contamination. Bodily injury claims were filed by 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 $1,500,000. 
    4. A convention taking place at a golf & ski resort was disrupted and forced to relocate because of the odor from an onsite wastewater treatment plant. A suit in the amount of $100,000 was filed against the golf resort for loss of enjoyment and for costs to relocate the convention. 
    5. During the night, a fire broke out and the fire department’s high-pressure hoses forced melting plastics, metals, insulation, roofing, drywall, chemicals, and other materials to build up inside the building’s foundation, creating a toxic “sludge”. Some of the toxic “sludge” escaped the building and migrated into the surrounding soils and a nearby stream. The property owner was responsible for clean-up costs and natural resource damages, which totaled over $2,000,000.  NOTE: fire departments are immune to pollution claims arising from their work while putting out fires.  
    6. A ski resort unknowingly used contaminated water for its snow making resulting in hundreds of thousands of gallons of contaminated water being spread across the lower part of the mountain. Old mining tailings from a closed down mine in the area was the source of the contamination and had been contaminating the water for some time. The resulting claim was for over $500,000 for the cleanup and remediation of the contaminated soil.
    7. A golf and ski resort stored gasoline in steel underground storage tanks (UST’s) for use in tractors, lawn mowers and golf carts. 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. 
    8. A golf course sent its waste golf cart batteries to an off-site facility for disposal. Over a period of several years, the facility did not adhere to applicable federal and state environmental regulations, and the golf course was found jointly liable for pollution conditions caused by the battery disposal facility. The settlement for cleanup exceeded $175,000. 
    9. An electrical contractor was hired to upgrade a buildings electrical system.  During trenching operations, a backhoe hit a natural gas pipeline causing an explosion. Third parties filed bodily injury claims against the contractor, as well as the resort whose club house was destroyed in the explosion. Claims exceeded $4.5 million. 
    10. A maintenance employee of a hotel could speak English but could not read English.  The employee accidentally mixed a hazardous chemical with a cleaning solvent which created a hazardous vapor cloud.  The hotel 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.

    Overlooked Benefits of Environmental Liability Insurance

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

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

    Overlooked Benefits of Environmental Liability Insurance:

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

    Environmental Liability Insurance Coverages

    Environmental Impairment Liability (EIL) 

    EIL is for golf and Ski Resorts susceptible to economic loss caused by pollution that actually or allegedly originated from their operations.  Sometimes referred to as pollution legal liability this coverage is for those who own, operate, lease, or have any other insurable interest in real property and the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions.  Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site 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, Commercial Auto 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 overturn of transported cargo. 

    Property Transfer Coverage

    When buying or selling property there can be unknown preexisting environmental conditions. Since environmental due diligence (Phase I, Phase II, BEA…) cannot guarantee uncovering all potential environmental liabilities, insurance companies have created property transfer insurance. This coverage protects the new owner or any party with an insurable interest, against unknown environmental conditions that may be discovered during the policy period, that were not caused by the new owner. This coverage not only helps to keep the property at its maximum value, it will assist the purchaser in being able to secure the necessary financing to complete their transaction. 

    Contractors Pollution Liability (CPL)

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

    Underground and 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’s necessary to make sure if your state has a tank fund that is financially sound and the time it takes to get reimbursed. 

  • Glass 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 Glass Contractors 

    May include, but are not limited to:  mold resulting from water intrusion or moisture encapsulation; storm water runoff; vapor intrusion; completed operations exposures including faulty installation;  fumes, emissions, or spills of chemicals used during construction (glazing liquids, finishers, sealants, adhesives, solvents, curing compounds); spills from mobile storage tanks;  release of materials as a result of vandalism; lead paint; illegal disposal of waste at a jobsite by unknown 3rd parties; asbestos; product transportation…

    Environmental Loss Examples

    • While installing new windows, a commercial contractor unknowing drilled through a small water pipe located behind a wall. The contractor did not realize the leak occurred, and over time a substantial amount of mold grew between the walls before anyone noticed. The contractor was held liable for the clean-up costs and a number of 3rd party bodily injury claims. Total cost of the loss exceeded $250,000. 
    • A commercial glass contractor installed new windows at a property that had been damaged by a recent storm. 6-months after the job mold was discovered in the building. The property owner sued a number of the contractors, including the glass contractor for faulty installation. After further investigation, it was determined that the glass contractor was not at fault and the suit was dropped. However, the glass contractor had already paid over $40,000 in legal defense costs.  
    • A commercial glass contractor was transporting a large amount of glazing liquid to a large commercial construction site. During transportation the contractor go into an accident. Several of the containers broke, and the glazing liquid released into a nearby stream. Costs for remediation and natural resource damages exceeded $120,000. 
    • A glass installation contractor was contracted to install the window systems on a new research laboratory for a university. The general contractor allowed for changes to the specified caulk used around the windows. The caulk was incompatible with the building façade materials. Although the glazier conducted and documented structural proof tests to ensure that the window, frames, caulk and substrate were water and air tight, the caulk degraded quickly. As a result, adhesion was lost, and water intrusion allowed mold to grow. Cost to remediate the mold exceeded $75,000.  
    • While working on a property renovation project, a glass contractor removed debris to install new windows. It was later discovered that the removed material contained lead based paint. The glass contractor was held liable for “exacerbating” the situation. Remediation, 3rd party bodily injury claims, and legal defense costs exceeded $1,000,000. 

    Benefits of Environmental Liability Insurance

    Because pollution exposures are a severity risk (versus a frequency risk), most glass contractors lack the financial strength to self-insure their environmental liabilities. Since every glass 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.

    Three Overlooked Benefits of environmental liability insurance; 

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

    Environmental Liability Insurance Coverages

    Contractors Pollution Liability (CPL)

    Contractors Pollution Liability (CPL) insurance protects the insured should they cause or exacerbate an environmental condition while performing their contractor services.  CPL protects the insured for covered operations performed by or on behalf of the insured, while operating away from any premises they own, rent, lease or occupy. 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, commercial auto policies will exclude pollution losses arising from spills or other releases of transported cargo. Transportation pollution liability affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and overturn of transported cargo.    

    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? 

  • Food Processors

    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. 

    Environmental Exposures Impacting Food Processors 

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

    Environmental Loss Examples

    1. A slaughterhouse disposed of all its waste down a floor drain.  The drain was connected to a storm sewer drain that led directly to a nearby stream.  A fish kill occurred as a result of high biological oxygen demand in the stream.  Under the Clean Water Act (CWA), a local environmental group filed suit for loss of the stream.  The slaughterhouse spent $750,000 remediating the problem.
    2. Over a period of several years’ storm water from a chicken processing plant entered a nearby stream and lake.  Due to excessive algae and bacteria in the lake nearby residents and businesses filed claims that exceeded $2,000,000 for property damage, loss of enjoyment and perceived bodily injury. 
    3. Pilgrim’s Pride Corp., and three business associates were fined $500,000 by the Texas Natural Resource Conservation Commission for alleged violations of the state’s air, water and waste standards.  TNRCC found at least four alleged instances of unauthorized wastewater discharges and three alleged nuisance orders instances at two processing plants owned by the Pittsburgh, Texas based Food Company.
    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 for investigation, removal and disposal exceeded $320,000.  
    5. A spill at a food processors facility allowed high levels of Alimet to enter the local wastewater treatment system. The Alimet killed the bacteria that process wastewater effluent in the system, causing almost undiluted ammonia to flow into the creek. Local authorities fined the food processor more than $550,000 for the spill, which killed over one thousand fish and other aquatic life in the creek. 
    6. A waste hauler was hired to transport 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 food processor must contribute for their apportionment of the load for cleanup cost since federal law states that you own your waste from cradle to grave.  Cost to settle the claim for the service station was $700,000. 
    7. A food processor 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 food processor’s operation, and that the processing facility was not the source of the contamination. The food processor was eventually released from the lawsuit. However, they had already expensed over $200,000 in legal defense and investigation costs. 

    Benefits of Environmental Liability Insurance

    Because pollution losses are a severity risk, versus a frequency risk, most food processing operations lack the financial strength to self-insure their environmental liabilities.  Since every food processing operation is impacted by environmental liabilities, consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy, versus self-insurance.

    The Three Main Benefits environmental liability insurance offers:  

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

    Environmental Liability Insurance Products

    Environmental Impairment Liability (EIL) 

    EIL is for food processing operations susceptible to economic loss caused by pollution that actually or allegedly originated from their properties.  Sometimes referred to as pollution legal liability this coverage is for those who own, operate, lease, or have any other insurable interest in real property and/or the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions.  Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site 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.  You can cover multiple locations on a single policy.

    Transportation pollution Liability 

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

    Underground Storage Tanks

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

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

    Contractors Pollution Liability (CPL)

    CPL provides coverage for the insured, should they cause a pollution event while working at a 3rd party location. Livestock contract workers, co-op services, in performing their operations may cause an environmental liability that is generally excluded from their general liability coverage. For these contractors there is contingent contractor’s pollution liability (CCPL) coverage. Basically they are afforded the same coverage as remedial contractors but the cost to purchase this insurance is substantially less. 

    Property Transfer Coverage

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

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

    This coverage not only helps to keep the property at its maximum value, it will assist the purchaser in being able to secure the necessary financing to complete their transaction.  You can cover multiple locations on a single policy.

  • Food Distributors

    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 Food Distributors 

    May include, but are not limited to;  Product recall for contamination;  Uncertainties about the historical use and conditions of property;  Spills from underground and/or aboveground storage tanks;  Pollution cleanup that results from a fire;  No secondary containment for above ground storage tanks;  Vapor intrusion;  Spills or leaks from the storage and handling (loading/unloading) of material containers such as drums, totes or bags from vehicles;  Parking equipment over unsealed surfaces allowing contaminants such as oil, fuel, anti-freeze, hydraulic fluids, asbestos… to pollute the ground;  No emergency response training for employees;  Unknown, abandoned underground storage tanks;  Pollution liabilities that occur while transporting cargo;  Accumulated old tires, batteries, equipment…;  Raw materials stored on site;  Inadequate or no auditing of hazardous and non-hazardous waste handlers, transporter and disposal companies;  Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Stormwater runoff;  Utilities that cross your property;  Corroded wastewater and storm water sewers;  Natural resource damages;  Asbestos or lead containing materials;  Silica;  Mold / Legionella;  Illegal dumping of waste on your property by unknown 3rd parties;  Pollutants from neighboring properties migrating onto yours and more…

    Environmental Claims Scenarios

    1. While transporting products over the road, the driver for a food distributor got into an accident and overturned. The products being hauled escaped the trailer and ended up in a nearby stream. Costs for remediation and natural resource damages exceeded $85,000. 
    2. Loading/unloading of products and material was conducted over unsealed truck ramps.  Over a period of several years, ground water became contaminated from pollutants that were released from idling trucks and storm water runoff.  Since the ground water was the only source of drinking water for surrounding residents and the state environmental regulatory agency designated the distributor as the responsible party, the distributor had to pay over $1,400,000 in cleanup costs and supply suitable drinking water until the local municipality could extend water services out to the surrounding residents.  
    3. A facility began expansion of a production line. During excavation, oily soils with a petroleum odor were discovered. Further investigation uncovered an old, undocumented sludge-drying pit. The property owner had to remove and remediate the soils at his expense. Cleanup costs exceeded $400,000. 
    4. The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank used for a trucking fleet 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.
    5. During the night, a distribution facility caught on fire. As the fire department put out the fire, their high-pressure hoses forced melted plastics, metals, insulation, roofing, drywall, laminate, stored products, and other materials to build up inside the building’s foundation, creating a toxic “sludge”. Some of the toxic “sludge” escaped the building and migrated onto to neighboring properties. The distributor was responsible for all clean-up costs, 3rd party property damage, and 3rd party business interruption, in addition to natural resource damages, which totaled over $2,000,000.  NOTE: fire departments are immune to pollution claims arising from their work while putting out fires.  
    6. A 1,000-gallon diesel aboveground storage tank used for the backup power generator for a distribution facility was in a concrete secondary containment that was cracked. A rupture of the tank spilled 700 gallons into the containment that seeped into the ground causing excavation and disposal of the contaminated soils along with engineering and legal fees exceeding $90,000.  
    7. A delivery truck got into an accident and caught on fire.  The burning cargo created toxic fumes and when the fire department put out the fire it created contaminant runoff that flowed into a nearby stream.  Cost to remediate the site and claims from third parties for bodily injury and property damage due to exposure to toxic fumes exceeded $800,000.

    Benefits of Environmental Liability Insurance

    Because pollution losses are a severity risk, versus a frequency risk, most food distributors lack the financial strength to self-insure their environmental liabilities.  Since every food distributor 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 cleanup costs associated with environmental claims. However, the cost of cleanup in often far less than other costs that can be associated with a pollution 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 Products

    Environmental Impairment Liability (EIL) 

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

    Transportation Pollution Liability 

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

    Underground Storage Tanks

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

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

    Property Transfer Coverage

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

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

    This coverage not only helps to keep the property at its maximum value, it will assist the purchaser in being able to secure the necessary financing to complete their transaction.  You can cover multiple locations on a single policy.

  • Flooring Contractors

    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. 

    Many insureds 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 insureds exposed to potentially uncovered claims. What pollutants are impacting your business?

    Environmental Exposures Impacting Flooring Contractors

    May include, but are not limited to: PFAS Chemicals; Failure to identify or mischaracterize contamination, such as mold, while performing work;  Hazardous air emission from lacquer, varnish, sealants, formaldehyde and other chemicals;  Silica;  Disturbing lead based paint;  Legal defense for 3rd party nuisance claims;  Puncturing utilities within a building, such as water pipes, fire supersession systems, etc.;  3rd party business interruption;  Asbestos;  Spills or raw materials at jobsites or during transportation;  Faulty installation, allowing mold to develop;  No auditing of 3rd party disposal companies for your unused raw materials and job waste; and more… 

    Environmental Claim Scenarios

    1. While installing a new gym floor at a local high school, inadequate containment allowed fumes to exit the gym and spread throughout parts of the high school. Several students were rushed to the hospital, with one student being in severe condition. Total cost for 3rd party bodily injury claims exceeded $500,000. 
    2. A flooring contractor hired a waste hauler to transport used materials (lacquer, sealants, varnish, etc.) to a 3rd party disposal facility. During transportation, the hauler got into an accident, causing the truck to overturn and spills its load.  Under CERCLA, the contactor 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 over $100,000.
    3. Before rehabbing an old wood floor, the flooring contractor tested for lead based paint. The test came back negative, so the contractor proceeded with reconditioning. A couple days into the project it was discovered that some of the paint did contain lead, which many people had been exposure to over the previous few days. Total cost for remediation, 3rd party bodily injury, 3rd party property damage exceeded $350,000. 
    4. While installing new flooring at a commercial building, a contractor unknowingly punctured a small water pipe beneath the floor. A year later, a massive amount of mold was discovered within the floor and walls of the commercial building. The flooring contractor was found liability for bodily injury, remediation, and business interruption, as the commercial tenants were forced to suspend operations while the mold was being remediated. Total cost of the claim was over $1,000,000. 
    5. While working on an upper floor in a commercial building, a contractor’s saw to cut through the floor, inadvertently disturbing and releasing asbestos-containing insulation material. The contractor had to pay cleanup costs and 3rd party liability claims in excess of $90,000. 

    Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting Flooring Contractors, pollution losses are not a frequency risk, but rather a severity risk. Since every Flooring 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 litigious.  Even if you do nothing wrong you can still get named in a suit and must expense defense costs i.e. legal fees, environmental investigations, etc.  
    2. Claim Management:  All policies come with specialists to assist you in handling a claim.  Who oversees communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability:  Most the time, the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption.  You need to look at your client’s and neighbors that can be impacted if you or a sub-contractor/vendor cause an environmental loss.        

    Environmental Liability Insurance Coverages 

    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. 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.   

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

    Environmental Impairment Liability (EIL) 

    EIL is for environmental service providers that own, rent, lease, operate or have any other insurable interest in real property (a fixed site facility such as a service garage and shop, transfer/recycling facility, landfill….) 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.   

  • Fire Suppression System Contractors

    What is a Pollutant? 

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

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

    Environmental Exposures Impacting Fire Suppression System Contractors

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

    Environmental Loss Examples:

    1. A contractor used a hole-saw while installing a new fire suppression system at an office building. Unknown to the contractor, the saw made a small puncture on the water line, allowing water to slowly drip from the pipe. Months later a tenant noticed dampness on the walls. After further investigation, the leak was discovered and mold had developed. The contractor was responsible for cleanup costs, and 3rd party business interruption, as the tenants were forced to shut-down while the mold was being remediated. Total cost of the claim exceeded $750,000.  
    2. A university contracted a fire suppression system contractor to update the fire system in their chemistry building. While dismantling piping, the contractor discovered a mercury spill that resulted in mercury contamination throughout the building. Costs to clean up the contamination and restore the building to its original condition was $350,000.  The fire suppression system contractor was named in the suit for exacerbating the mercury spill.
    3. The fire suppression system at a manufacturing facility accidentally turned on and began spraying through the entire building. Water from the system mixed with non-compatible chemicals, creating a hazardous vapor cloud throughout the building. Several employees were rushed to the hospital and treated for exterior and internal burns from inhaling the vapor. Total cost for 3rd party bodily injury, property damage, business interruption, and cleanup exceeded $5,000,000. 
    4. A fire suppression system contractor was sued when mold was discovered in a commercial building they had worked in the year before. After further investigation, the mold was determined to have developed from faulty work by a window installation contractor. The fire suppression system contractor was removed from the suite. However, they had already expensed over $45,000 in defense fighting the claim. 
    5. A fire suppression system contractor performed maintenance at a local business. As this was a seasonal business, it was several months before anyone noticed that a leak had developed in the system piping. When the owners returned after vacation, they found mold growing throughout the building. The entire building had to be gutted and refinished, costing the Insured well over $600,000.
    6. A contractor exacerbated an existing environmental condition while updating and re-piping a commercial building. The contractor was named in a lawsuit for exacerbating and spreading of asbestos material throughout the building. Total cost of the claim for cleanup and legal defense exceeded $100,000

    Benefits of Environmental Insurance 

    Unlike most liability exposures impacting fire suppression system contractors, pollution losses are not a frequency risk, but rather a severity risk. Since every fire suppression system 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 times the clean-up costs are far less than other costs that often arise from the loss.

    Three Overlooked Benefits of Environmental Liability Insurance:

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

    Environmental Liability Insurance Products

    Contractors Pollution Liability (CPL)

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

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

    Transportation Pollution Liability

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

    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. 

    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? 

     

  • Financial Institutions

    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. 

    Insured’s should be aware that pollutants (such as mold) are excluded from coverage on most GL policies. And GL policies that do provide pollution coverage typically do so on a limited basis, with inadequate limits and/or strict discovery and reporting requirements for there to be coverage. In the event of a pollution loss at one of your properties, does your insurance provide adequate coverage?

    Environmental Exposures Impacting Financial Institutions

    May include, but are not limited to; Historical contamination from agriculture, mining, lagoons, landfills, manufacturing, scrap yards, gas stations;  PFAS / PFOA;  Illegal dumping or burial of hazardous materials;  Pollution from neighboring properties migrating onto Financial Institution owned or collateral property;  Storm water runoff;  Natural resource damages; Vapor Intrusion;  Easements that cross the property which may leak or spill hazardous materials;  Contamination such as fertilizers or pesticides from past farming / landscaping or similar uses;  Leaks from elevator hydraulic fluid storage tanks;  Impacting sensitive areas such as wetlands or endangered species;  Corroded wastewater and storm water sewers;  Excavation through and spreading of unknown preexisting contaminated soil;  Impacting groundwater from drilling and excavation work (i.e. cross contamination of aquifers, etc.);  Old and/or unknown leaking underground storage tanks;  Impacting underground utilities during construction;  Tenants using or storing environmentally sensitive materials, chemicals, waste….;  Spill of oils/fuels/chemicals brought onsite;  Vandalism;  Sick building syndrome; Mold; Asbestos;  Lead;  loading and unloading products/materials from tucks, rail road, barges, aircraft over unsealed ground;  Past/present use of septic systems;  Above ground or underground storage tanks;  Adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Wastewaters generated from human septage;  Janitorial cleaning compounds;  No emergency and spill control plans;  nuisance odors;  Devaluation of real estate asset due to buyers uncertainty concerning possible contaminants;  Silica;  Brownfields, etc..

    Environmental Claim Scenarios

    1. A bank loaned funds to a commercial real estate developer to develop several hundred acres of land that had been sitting idle. Though there were never industrial activities on the property, a thorough due diligence was completed. The property was given a clean bill of health and an aggressive redevelopment plan, including both residential and retail sections, was begun. Three months later, an excavator uncovered rusty barrels that had been leaking chemicals. Within days, investigators confirmed high levels of arsenic and heavy metals in the soil and groundwater on neighboring properties. The local drinking water supply was promptly shut down and over 10,000 residents were instructed to drink only bottled water. On top of the costs to remove contaminated soil and locate a reliable water source, legal suits for bodily injury and property damage totaled over $25 million. The developer defaulted on the loan and filed for bankruptcy.
    2. A Financial Institution was preparing a foreclosed site for re-sale.  While the facility was unoccupied thieves broke into the structure to steal wiring and copper piping.  In the process the thieves damaged a transformer releasing PCB containing oil to the floor.  The financial institution was responsible for the clean-up of the contaminated concrete and soils which exceeded $200,000.
    3. A real estate developer placed a new building on the site of a former parking lot. During excavation, petroleum hydrocarbon contamination was discovered.  Cleanup costs exceeded $700,000. 
    4. A Financial Institution had collateral property a real estate developer was going to build several office buildings on.  During the time from the property purchase until development began waste was illegally disposed of on the property.  Testing revealed the cost to clean up the illegally disposed of waste would be several hundred thousand dollars which caused for the real estate developer to default on the loan.  The bank did not foreclose on the property concerned with potential lender liability exposures.  The case was still in litigation at the time of this report.
    5. A Financial Institution purchased the site of a former gas station on which they planned to place a branch office.  Environmental due diligence did not reveal any Recognized Environmental Conditions (REC).  Once the branch was built it was discovered that vapor intrusion from a neighboring property was causing sick building syndrome in the bank branch.  The Financial Institution spent in excess of $100,000 for testing, installing a vapor barrier and ongoing remedial services.  
    6. An environmental consultant performed a phase I site assessment at a site that had been previously used for manufacturing.  The Phase I said there were no Recognized Environmental Conditions (REC).  A Financial Institution loaned money on the property but during development an unregistered underground storage tank that was leaking was discovered.  The cost to remediate the site was in excess of $300,000 and along with diminution in value forced the Financial Institution to re-work the terms of the loan agreement to prevent foreclosure.  The property developer sued the consultant but it was determined the consultant followed proper protocol in performing the Phase I assessment.
    7. A Financial Institution hired an HVAC contractor to upgrade their buildings HVAC system.  In performing their work, the contractor failed to vent the system properly. This caused for mold to build up in the duct work.  Over time building occupants began complaining of headaches and nausea.  As a result, several bodily injury suits were filed against the financial institution / building owner, who in turn sued the HVAC contractor for in excess of $1,500,000. 
    8. A Financial Institution was built near a dry cleaner.  After the building was constructed vapor intrusion was detected in the building.  Testing identified PCE a dry-cleaning chemical was in soil and groundwater causing the vapor intrusion.  The dry cleaner was forced out of business and the Financial Institution Paid in excess of $400,000 for environmental due diligence, remediation, defense, third party bodily injury and property damage claims.
    9. New construction commenced on a previously undeveloped parcel of land.  During excavation and dewatering activities, contaminated groundwater was discovered.  The developer was required by State regulatory authorities to collect, test and treat groundwater pumped out during the excavation process.  Contaminated soils were also discovered at the site.  Construction delays and additional expenses totaling over $1,000,000 were incurred by the developer.  It was eventually determined that the contamination had migrated from a nearby manufacturing facility that had gone into bankruptcy several years prior to the development project.
    10. A Financial Institution had a plating company as a client.  Contamination was discovered on the plating company’s property causing the plating company to go out of business.  This resulted in the plating company defaulting on their mortgage, line of credit and other lines of business with the Financial Institution. 
    11. A lender who provided a loan for a hotel purchased a Commercial Lender Environmental Policy.  After foreclosure, it was discovered that the hydraulic elevators had been neglected and leaked PCBs.  Due to the nature of the release, cleanup was limited and elevated levels of PCBs were allowed in place following remediation.  As a result, a diminution in value claim was made by the lender based on the now contaminated site being worthless. 

    Overlooked Benefits of Environmental Liability Insurance

    Unlike many liability exposures impacting financial intuitions, environmental losses are a severity risk, rather than a frequency risk. Since every Financial Institution is impacted by environmental exposures, consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy, versus self-insuring. 

    Overlooked Benefits of environmental liability insurance: 

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

    Environmental Liability Insurance Coverages

    Environmental Impairment Liability (EIL) 

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

    Lender Liability Coverage (LLC)

    For years Financial Institutions have utilized environmental indemnifications in their loan documents for commercial real estate backed loans as an attempt to protect themselves from environmental liabilities.  In the mid 1990’s, environmental due diligence (Phase I, Phase II… environmental site assessments) was added as another layer of defense for a Financial Institutions lender liability exposure.  

    In today’s transparent business environment, we know the problems created by this approach and the fact that environmental indemnifications and due diligence are a very cursory way of addressing environmental liabilities.  As so many Financial Institutions have learned, when it comes to environmental liabilities, a client’s environmental problem can become the Financial Institutions problem.

    To address the potential environmental liabilities faced by Financial Institutions, there is a risk transfer product called Lender Liability Coverage (LLC).  LLC enables Financial Institutions to shield assets by protecting collateral and insuring environmental liability arising from collateral properties.  LLC fills gaps created by traditional environmental indemnifications, due diligence….

    LLC provides collateral value protection in the event of a loan default and a newly discovered pollution event at the covered location.  When this occurs, LLC can pay the lesser of the outstanding loan balance and extra expenses or the estimated cleanup costs.  If the estimated cleanup costs are 50% or greater than the outstanding loan balance you may select payment of the outstanding loan balance, or payment of the outstanding loan balance and extra expense.  

    Foreclosure is not required prior to making a claim and some insurance carriers offer a broad definition of default that includes both monetary and technical default. 

    LLC can be used on a single transaction or on a portfolio basis.  Coverage is offered on multiyear policies that can run up to the term to maturity of the insured loan.  LLC offers the ability to assign interest to a successor lien holder. LLC allows a Financial Institution to be more competitive on loans they would once be forced to pass-up due to environmental uncertainties, plus;

    • Increase loan portfolio value by protecting collateral and insuring environmental liability arising from collateral properties.  
    • Offers first party cleanup costs for claims made after the lender has foreclosed on a covered location. 
    • Covers third party bodily injury, property damage claims (includes clean up costs and natural resource damages), and defense costs, caused by a pollution event during the policy period at the covered location.  
    • Claim reopeners for discovery of new and / or additional cleanup costs.
    • Accelerates the loan process.  Note:  For financial institutions with in-house environmental departments, LLC provides valuable tools to assist in expediting and securing loans.  For financial institutions that outsource their environmental services, LLC can assist by expanding your environmental services and reduce costly outsourcing.
    • Reduces costs by minimizing or eliminating traditional environmental due diligence processes.
    • Allows Financial Institutions to better manage cash flow in the event of a claim. 
    • Coverage is offered on a single transaction or master portfolio basis.  
    • Multiyear policies, up to the term to maturity of the insured loan as outlined in the mortgage agreement.  
    • Has the ability to enhance a pool’s credit rating.  Rating agencies have recognized that environmental insurance can add credit support to commercial mortgage pools.  
    • Expert claims handling service.

    Property Transfer Coverage

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

    This coverage not only helps to keep the property at its maximum value, it will assist the purchaser in being able to secure the necessary financing to complete their transaction.  You can cover multiple locations on a single policy.

     

  • Excavation 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 Excavation 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; 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; etc. 

    Environmental Claim Scenarios

    • An excavation contractor unknowingly spread petroleum-contaminated soil across a project site during fill operations for a commercial office building. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor was eventually removed from the lawsuit. However, they incurred $90,000 in defense costs. 
    • An excavation contractor ruptured a natural gas pipe while working on a job, which created a large 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. The contractor was subject to cleanup costs and business interruption expenses in excess of $1,000,000 
    • Overnight, vandals illegally entered a jobsite and accidentally released the contents of an above ground storage tank used to fuel equipment. The cost to clean-up the 500 gallon release was in excess of $80,000.
    • An excavation contractor was preparing a site for a new commercial structure. 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.  
    • An exaction contractor dropped a piece of heavy equipment onto a pipe leading to a hydrofluoric acid tank. Acid was emitted creating a vast vapor cloud.  Approximately 3,000 residents were evacuated and 1,000 were treated for respiratory injuries.   The court entered judgment holding the contractor responsible for bodily injury, business interruption, property damage and remediation costs in excess of $10,000,000.  
    • An excavation contractor hired a waste hauler to transport its used equipment oil and fluids. 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 carrier had to pay their apportionment of the remediation costs which totaled $450,000.     
    • 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. 
    • An excavation contractor hauled clay from a jobsite that contained unknown contaminants. While transporting the clay, heavy rains started, which allowed the contaminants in the clay to escape from the truck. During the course of transporting the contaminants were found to have spread over a 35 mile route.  EPA fines and remediation expenses were in excess of $300,000. 
    • During the construction of a parking garage below the structure, silica dust migrated up an elevator shaft and disbursed throughout all floors of the building.  It was determined that inadequate dust barriers were what allowed the silica to infiltrate the shaft. The liable contractor filed a claim with their GL carrier for the resulting property damage and bodily injury, but its insurer denied the claim, due to the policy’s pollution exclusion. The contractor was ultimately responsible for coving 100% of the loss. 
    • An excavator was doing site grading of a former gas station.  During grading activities, the excavator spreads soil contaminated with chlorinated solvents from a previously unknown dry cleaner on site.  The grading activity spreads the once isolated contaminated soil over the entire site, thereby resulting in significant remediation costs.  Additionally, adjacent property owner files a claim for business interruption of ingress onto his property during the remediation activities.

    Overlooked Benefits of Environmental Liability Insurance

    Because environmental losses are a severity risk, rather than a frequency risk, the majority of Excavation Contractors lack the financial strength to self-insure their potential environmental liabilities. Since every Excavation 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 an environmental 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? 

  • Environmental Contractors

    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. 

    Many insureds 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 insureds exposed to potentially uncovered claims. What pollutants are impacting your business?

    Environmental Exposures Impacting Environmental Contractors

    Asbestos/Lead/Mold Consultants

    Failure to identify or mischaracterize contamination during surveys; faulty design of remedial action and management plans causing bodily injury; diagnostic laboratory errors; hazardous air emission from incomplete abatement; inaccurate post-abatement certification…. 

    Drilling/Geotechnical Contractors

    Drilling through and spreading of unknown preexisting contaminated soil; impacting groundwater from soil boring and monitoring well installation work (i.e. cross contamination of aquifers, etc.); impacting underground utility lines and other underground structures…. 

    Ecological Consultants

    Incorrect identification/delineation of wetlands, forest and other government-regulated areas; improper selection and usage of pesticides and herbicides; improper design of irrigation systems…. 

    Environmental Engineers and Consultants

    failure to identify contamination during site assessment/audits;  impacting underground structures from subsurface investigation activities; cross contamination of aquifers due to improper well design, improper selection of materials and equipment leading to remedial system failure;  improper installation and permitting of remedial systems leading to hazardous waste releases; failure to notify public and/or EPA of contamination or releases; failure to effectively monitor and maintain safe working conditions; CERCLA liability due to O&M activities at Superfund sites and from waste disposal site selection; vicarious liability due to use of subcontractors and sub-consultants…. 

    Geotechnical Engineers 

    Impacting of underground structures and groundwater from subsurface investigations; inaccurate foundation design and structural damage from settling due to varying soil conditions; inaccurate lab results due to faulty sampling or field testing techniques; construction delays and cost overruns due to differing site conditions…. 

    Laboratories

    Failure to detect contaminants due to inaccurate data interpretation; inadequate or improper storage of samples; performance of inappropriate/incorrect tests or analytical methods; lack of adherence to QA/QC procedures; improper sample preparation; exceeding sample holding times, lab equipment not properly calibrated…. 

    Remedial Action Contractors 

    Impacting underground utilities and other underground structures leading to collapse and/or explosion; exacerbation of preexisting contamination during excavation and cleanup efforts; air emissions and spills resulting from handling of hazardous substances; inadvertent mixing of incompatible wastes; release of oils/fuels from equipment leaks and vandalism; trench collapse due to improper shoring; completed operations exposures due to incomplete or improper line hookup and remedial system construction….

    Some additional environmental issues include; Inadequate procedures to ensure incompatible wastes are properly segregated and maintained in separate areas; Storing and stacking 55-gallon drums of hazardous wastes at multiple locations around the facility in uncontained areas over soils and/or near water; Lack of secondary containment around aboveground tanks; Storm water runoff; Releases to on-site soils, and on-site surface impoundments or landfills….

    Environmental Claim Scenarios

    1. A developer retained a consultant to perform a geologic/geotechnical investigation for a residential subdivision. During final grading on the site, a major landslide occurred which extended off-site and impacted adjacent properties. The developer filed suit against the consultant for breach of contract and negligence in failing to provide proper design engineering services during excavation of a sloped area. The resulting settlement totaled $300,000. 
    2. A developer hired a consultant to perform a subsurface geotechnical engineering investigation to determine the type of foundation necessary to support a proposed hotel. The geotechnical report included conclusions about the subsurface soil composition and a design recommendation for a shallow footing foundation. The report also included a disclaimer, which indicated the possibility that conditions between soil borings would differ from those actually sampled. During construction of the hotels foundation, the developer had to change the type of foundation that was originally proposed due to organic materials. Despite the disclaimer, the developer brought a suit against the consultant for over $500,000 for professional negligence, increased construction cost, lost profits and delayed opening and interest incurred on his loan for the hotel. 
    3. A consultant hired a driller to perform sampling of subsurface soils. The consultant directed the driller to drill and draw a sample. The driller accidentally advanced through a UST. Both the consultant and driller were sued for $140,000 in damages, including UST repair and soil remediation. 
    4. A consultant provided plans and specification for the installation of monitoring wells at a contaminated facility. Contamination had seeped from the ground surface into a shallow aquifer. Following installation of monitoring wells, sampling showed evidence of contamination in both the shallow aquifer and in lower lying aquifer. The facility owner filed a claim against the consultant, alleging that well placement (location and depth) was responsible for the cross-contamination of the lower lying aquifer. The settlement amounted to $250,000. 
    5. The Department of Energy (DOE) hired several environmental contractors to assist in operation one of its facilities. Following an accidental release of air pollutants, local residents filed a class action nuisance suit against the contractors, alleging emotional distress and diminished property value. The case was settled in the resident’s favor, for which an $80 million trust fund was established. Both the government and the contractors were required to contribute to the fund. 
    6. During remedial activities at a Superfund Landfill site, a remedial action contractor (RAC) inadvertently crushed several drums that were improperly classified as empty. As a result, several gallons of hazardous contents were released, causing localized soil contamination. The RAC failed to notify the EPA of the release, which resulted in both criminal and civil actions against the contractor. The RAC was held liable under CERCLA and was required to pay penalties exceeding $6.1 million. 
    7. A consultant failed to delineate wetlands on property, which was to be developed into a new regional landfill. As a result, the landfill had to be re-engineered, thus delaying its opening. The settlement amounted to $7 million. 
    8. A remediation contractor excavated a small underground diesel tank near a distribution warehouse and noted that stained soil surrounded the tank. The project manager advised the firm to continue excavating around the tank, which pulled up contaminated soil. Because of the foundations proximity to the distribution center, the excavation of contaminated material without proper shoring equipment caused the building’s wall to collapse. The distribution center’s walls and roof also collapsed. Reconstruction costs, business interruption, lost profits and additional remediation expenses totaled $1.2 million. 
    9. An environmental consultant performed a phase I site assessment at a site that had been previously used for industrial purposes.  The consultant submitted a report saying the negligible contamination had been found.  The property was subsequently sold.  During excavation an unregistered underground storage tank was discovered on the site that had been leaking.  The property developer sued the consultant for $1.2 million for remediation expenses, lost profits, and diminution in value.
    10. A consultant performed a modified Phase I assessment on a property being considered for purchase and determined that is had minor groundwater contamination.  During construction of the newly purchased property, the site contractor discovered extensive contamination that resulted in significant remediation costs.  The consultant was sued for over $1 million.
    1. A contractor was subject to cleanup costs after vandals opened an onsite mobile refueling tank causing diesel fuel to be released onto virgin soil.

    Overlooked Benefits of Environmental Liability Insurance

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

    Three Overlooked benefits of environmental liability insurance:

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

    Environmental Coverages for Environmental Contractors

    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…  

    Environmental service providers 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?

    Professional Liability 

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

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

    You have to also keep in mind there are contractors that in the performance of their work may act in a consultants or engineers capacity. You need to make sure you offer your client the broadest program available to meet their needs. By combining the coverage’s under one contract you are eliminating potential gaps in coverage.  Coverage can be purchased on a job specific basis or to cover all the work performed by your client on an annual basis. 

    Coverage applies specifically to services / operations identified under the policies declaration page.   

    Environmental Impairment Liability (EIL) 

    EIL is for environmental service providers that own, rent, lease, operate or have any other insurable interest in real property (a fixed site facility such as a service garage and shop, transfer/recycling facility, landfill….) that can be susceptible to pollution liabilities that actually or allegedly originated from the insured property. 

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

    Transportation Pollution Liability

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

    Underground Storage Tanks

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

    Property Transfer Liability

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

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