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  • Electrical 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 Electric Contractors 

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

    Environmental Loss Examples 

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

    Overlooked Benefits of Environmental Liability Insurance 

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

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

    Three Overlooked Benefits of Environmental Liability Insurance:

    • 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.  

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

    Environmental Impairment Liability (EIL) 

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

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

    Transportation Pollution Liability 

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

  • Educational 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. What pollutants are impacting your business? And is your General Liability policy providing adequate coverage? 

    Environmental Exposures Impacting Educational Institutions 

    May include, but are not limited to; storm water runoff;  pollution from neighboring property migrating onto yours;  vapor intrusion;  mold and bacteria in air conditioning and heating systems;  sick building syndrome;  lead paint;  asbestos;  spills or leaks from underground and/or above ground storage tanks;  easements that cross the property that may leak or spill hazardous materials;  exposure to automobile and bus support services such as fuel, antifreeze, oil, hydraulic fluids, batteries, old tires;  acidic laboratory, and maintenance chemicals; ground and water contamination from use of pesticides and fertilizers on grounds and athletic fields;  natural resource damages;  unsealed truck ramps;  improper maintenance of laboratory hood filters;  insufficient pretreatment of wastewater discharge to municipal wastewater treatment plant;  corroded wastewater and storm water sewers;  property donated with unknown pollution conditions;  No auditing of waste handling and disposal companies;  janitorial cleaning compounds;  adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Halon release from fire suppression equipment; spills and leaks from the storage and handling (loading/unloading)of material containers such as, drums, totes, bags from vehicles; temporary onsite storage of hazardous materials, etc. 

    Environmental Loss Examples

    1. In the chemistry lab of a high school, experiments were being conducted under an old hood. The hood filters failed and released toxic fumes into the community-several residents had to be evacuated and others rushed to the hospital. The school was sued for several third party claims, along with a $215,000 property damage claim for contingent business loss. 
    2. While constructing a new sports facility at a local high school, a contractor ruptured two abandoned 10,000-gallon underground storage tanks full of gasoline and diesel fuels. Since a private company donated the land to the school and the contractor did not have pollution insurance, the school was charged $200,000 for the environmental cleanup. 
    3. A school district decided to place a new building on the site of a former parking lot. During excavation, petroleum hydrocarbon contamination was discovered. The school district had no idea of the historical use of the area. Investigation and sampling pinpointed the source and extent of contamination. On-site treatment and/or cleanup costs will exceed $300,000. 
    4. The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils.  Total cost for investigation, removal and disposal exceeded $320,000. 
    5. A middle school student stole several vials of mercury from the science room.  Mercury was spilled in the school and on three school buses.  The student washed his hands in the drinking fountain.  The middle school was shut down so it could be decontaminated.  The schools 2 floor sweepers ($1,800 each) and one buffer ($5,000) had to be disposed of.  The three buses had to be decontaminated.  Cost and lost school time has not been calculated.
    6. A public school hired a contractor to remove two underground storage tanks and associated contaminated soil.  During the course of storage tank removal, the contractor’s backhoe hit a natural gas pipeline causing an explosion. Third parties filed bodily injury claims against the contractor, as well as the school who had a building destroyed in the explosion. Claims exceeded $2.5 million. 
    7. A HVAC contractor was hired to upgrade a high school’s heating system. While working in the building, the contractor failed to vent the system properly, causing a release of carbon monoxide. Several student and teachers began complaining of headaches and nausea, and were rushed to the local hospital. As a result, several bodily injury suits were filed against the school district, in excess of $700,000.  
    8. After a weekend, a janitor at a local high school discovered several piles of unidentified waste that had been illegally dumped on the property. The school had the piles tested, at a cost of several thousand dollars. The piles were determined to contain hazardous waste, and the cost to dispose of it exceeded $250,000. 
    9. While working at a nearby grade school, a commercial janitorial service contractor accidentally mixed non-compatible chemicals for cleaning.  The fumes from the chemicals forced the evacuation of at the school. Third party bodily injury claims were filed against the janitorial service company and the school district, which exceeded $1,000,000.

    Overlooked Benefits of Environmental Liability Insurance

    Because environmental accidents/conditions are a severity risk rather than a frequency risk, most educational institutions lack the financial strength to self-insure their environmental liabilities.  Since every educational institution 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 
    2. Claim Management:  All policies come with specialists to assist you in handling a claim.  Who is in charge of communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability:  The majority of the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption.  You need to look at your client’s and neighbors that can be impacted if you or a sub-contractor/vendor create an environmental loss.

    Environmental Liability Coverages for Educational Institutions

    Environmental Impairment Liability (EIL) 

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

    Property Transfer Coverage

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

    Transportation Pollution Liability

    Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of 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 & Aboveground Storage Tanks 

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

    Contractors Pollution Liability (CPL)

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

    As the owner of the property you have 2 options 

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

     

  • Drywall 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 Drywall Contractors 

    May include, but are not limited to; vapor intrusion; lead; asbestos; mold; silica; PFAS chemicals;  impacting utilities while working at a property; no auditing of waste handling and disposal companies; transportation & storing of raw materials; adhesives and compounds used during installation; failure to effectively monitor and maintain safe working conditions; rehabilitation projects at older properties; nescience claims; failure to property identify hazards such as mold while working at a jobsite; 3rd party business interruption claims; natural resource damages, installing contaminated drywall….

    Environmental Claims Scenarios

    1. While working on a historical property, a drywall contractor used a hole saw to cut through a wall. Unknown to the contractor, the saw inadvertently disturbed and released asbestos-containing insulation material. The contractor had to pay cleanup costs for the asbestos fibers released throughout the building, costing in excess of $40,000. 
    2. A drywall contractor was hired to install drywall at a property that had just been restored from flooding. A month after the job had been completed, mold was discovered between the walls where the drywall contractor had worked.  After further investigation, it was found that the mold was due to a failure made by the restoration contractor. The Drywall contractor was removed from the suit. However, they had already expensed over $25,000 in legal defense. 
    3. A drywall contractor working on a project to build a new multi-story building nicked a water pipe with a drywall screw while working on the 4th floor. This caused a slow leak behind the drywall that went down to the 1st floor resulting in mold growth throughout the floors below. The affected drywall was removed and replaced, and the mold remediated at a cost of $200,000.
    4. A residential construction company was sued when mold was discovered in multiple spec homes built by the contractor and its subs. Because it could not be determined which party was responsible, the general contractor and a number of its subs were all held liable and were ordered by a court of law to share in the mold remediation costs. 
    5. A child who lived in an apartment building constructed in the 1970s was diagnosed with lead poisoning. The renovation of the building by a drywall contractor allegedly caused unsafe conditions for the child, and the child’s parents filed a bodily injury claim against the drywall contractor. As part of the claim investigation, an expert was hired and other potential causes for the lead poisoning were discovered. As a result, the drywall contractor wasn’t held liable. However, they had already spent over $35,000 in legal fees fighting the claim. 
    6. A drywall contractor unknowingly installed contaminated dry wall on numerous houses.  After a period of time, homeowners began to have breathing issues and metal piping was corroding.  Suits were filed against the general contractors along with the drywall contractor.  The accumulated suits caused for the drywall contractors bankruptcy.  

    Benefits of Environmental Liability Insurance 

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

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

    Three Overlooked Benefits of environmental liability insurance:

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

    Environmental Liability Insurance Coverages 

    Contractors Pollution Liability (CPL)

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

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

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

    Environmental Impairment Liability (EIL) 

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

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

    Transportation Pollution Liability 

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

    Underground Storage Tanks

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

    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? 

  • Drilling 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 Drilling Contractors 

    May Include, but are not limited to; Storm water runoff;  completed operations exposures including incomplete construction causing spills or emissions;  lubricant oils and other fluids from field equipment;  release of oils / fuels as a result of vandalism;  site preparation / excavation work through preexisting unknown contaminated soil;  air emissions from silica, dust and debris; impacting abandoned underground storage tanks; spreading of unknown preexisting contaminated soil;  impacting groundwater from drilling and excavation work (i.e. cross contamination of aquifers, etc.); impacting underground utilities and other underground structures;  release from portable storage tanks;  natural resource damages;  vapor intrusion; PFAS chemicals;   and more…

    Environmental Claim Scenarios

    1. While putting in a pilot hole for new utilities in a commercial area, a drilling contractor ruptured an unmarked natural gas line. Before the gas line was shut off, hundreds of gallons were released into the soil. Due to safety concerns, local authorities ordered the evacuation within a 2-block radius, which interrupted the operations of nearby businesses. As a result of the accident, 3rd party business interruption claims totaled over $400,000, remediation expenses totaled roughly $100,000, and the contractor experienced additional losses due to project delays.  
    2. A contractor was drilling a new utility channel. The drill passed through and exacerbated a preexisting-unknown pollution condition that had been contained by the clay. The drill allowed contaminants to spread into the surrounding soils. Remediation expenses totaled over $50,000.
    3. 6-months after completing the drilling and installation of a pipe carrying natural gas, pressure in the pipe began to decline. After further inspection, it was found that a leak in the pipe was allowing natural gas to spread into the surrounding soils. The owner of the property filed suit against both the general contractor and the drilling contractor. Even though the drilling contractor was not held liable for the loss, they still accumulated over $50,000 in legal expenses fighting the claim.  
    4. A drilling contractor was installing a new pipe through a layer of clay that contained unknown contaminants. While the clay was staged on the job site, heavy rains started, which allowed the contaminants in the clay to migrate offsite.  EPA fines and remediation expenses were in excess of $250,000. 
    5. A drilling contractor caused a release of raw sewage in both soil and groundwater after failing to identify a sewer line before drilling.  The cleanup entailed the excavation of several tons of soil ad caused nearby businesses to be shutdown for a few days when their basements filled with raw sewage.  Substantial claims were filed for business interruption and cleanup costs.

    Overlooked Benefits of Environmental Liability Insurance

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

    Contractors Pollution Liability (CPL)

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

    Transportation Pollution Liability 

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

    Underground 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.  

    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. 

  • Distilleries

    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 Distilleries 

    May include, but are not limited to; Disposal of liquid wastes in septic or leach systems; Pollutants from neighboring properties migrating onto your;  Mold;  Asbestos;  Lead;  Storage and transportation of raw materials and product;  Leaking above and/or underground storage tanks;  Air emissions from distilling process;  Storm water runoff;  Vapor intrusion;  Spills from loading and unloading product and materials;  Faulty refrigeration units;  Faulty on-site disposal of trash, garbage and other waste materials;  Historical contamination of property due to prior property uses;  Natural resource damages;  Vandalism;  Easements on the property (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;  Cleanup of toxic sludge that develops after a fire;   Devaluation of property to do known or perceived environmental conditions; and more…

    Environmental Claim Scenarios

    1. A Wild Turkey distillery caught on fire. Inside the warehouse were 17,262 barrels of bourbon, each containing 53 gallons of 107 to 112 proof bourbon. Much of the alcohol escaping measured 50 percent by volume. Some of the bourbon had aged 15 years already. The liquid had to go somewhere since it couldn’t all burn at the same time, and ended up in the Kentucky River. No one was killed from the fire, but the damage had just begun. This accident forced schools and businesses in a town of 8,000 to close for 2-days. People from Frankfort called to say that they could smell the bourbon from the water. A few dead fish had also floated to the surface.  As a few more days passed, the number of dead fish had reached into the tens of thousands. The ultimate cause of the fish kill was not from alcohol poisoning, but to the depletion of oxygen. The alcohol was shown to be the accelerator food source causing a major bacteria outbreak that consumed the oxygen in the river and created a dead zone some 9-12 miles long.  Wild Turkey distillery was liable for the cleanup, 3rd party property damage and business interruption, and natural resource damages….
    2. 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, which seeped into the underlying soils and required costly remediation. The total cost for investigation, removal and disposal exceeded $320,000.
    3. A waste hauler was hired to transport manifested waste materials to a 3rd party disposal site.  During transportation the hauler got into an accident, causing the truck to overturn and spills its load.  Under CERCLA, the distillery must contribute for their apportionment of the load for cleanup cost since federal law states that you own your waste from cradle to grave.  Cost to settle the claim was $700,000. 
    4. As the result of a fire, a distillery was subject to clean up cost in excess of $400,000.  While the fire department was extinguishing the fire, burning and melting inventory comingled creating a hazardous contaminant that went into the local storm water system.  The storm water system emptied directly into a stream.  In addition to cleanup costs, the distillery also had to pay an additional $150,000 for natural resource damages to the streams ecosystem.  NOTE: fire departments are immune to pollution claims arising from their work while putting out fires. 
    5. A distillery was sued when contamination was discovered in the drinking water at a new residential development. After further investigation, it was determined that the pollutants were not used as part of the distillery’s operation, and that the processing facility was not the source of the contamination. The distillery was eventually released from the lawsuit. However, they had already expensed over $50,000 in legal defense costs. 
    6. During expansion of a production line, excavators came across oily soils with a petroleum odor.  Further investigation uncovered an old, undocumented sludge-drying pit, which the previous owner had used. The distillery had to remove and remediate the soils. Cleanup costs exceeded $400,000. 

    Overlooked Benefits of Environmental Liability Insurance

    Because pollution losses are a severity risk, versus a frequency risk, most distilleries lack the financial strength to self-insure their environmental liabilities. Since every distillery 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 distilleries 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.

  • Directional Drilling 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?

    Environmental Exposures Impacting Directional Drilling Contractors   

    Storm water runoff;  completed operations exposures including incomplete line hookup or improper system construction causing spills or emissions;  lubricant oils and other fluids from field equipment;  release of oils / fuels as a result of vandalism;  site preparation / excavation work through preexisting unknown contaminated soil;  air emissions from Silica, dust and debris; impacting abandoned underground storage tank; spreading of unknown preexisting contaminated soil as fill;  impacting groundwater from drilling and excavation work (i.e. cross contamination of aquifers, etc.);  impacting underground utilities and other underground structures;   releases from portable storage tanks;  natural resource damages;  vapor intrusion, PFAS chemicals…. 

    Environmental Loss Examples

    1. While putting in a pilot hole for new utilities in a commercial area, a directional drilling contractor ruptured an unmarked natural gas line. Before the gas line was shut off, hundreds of gallons were released into the soil. Due to safety concerns, local authorities ordered the evacuation within a 2-block radius, which interrupted the operations of nearby businesses. As a result of the accident, 3rd party business interruption claims totaled over $400,000, remediation expenses totaled roughly $100,000, and the contractor experienced additional losses due to project delays.  
    2. A municipality hired a directional drilling contractor to assist in the installation of a new network of data and voice cables. The job included horizontal drilling under several roads. While drilling, the contractor hit a fuel line and did not report it. More than two years later nearby residents began to smell gas in their well water. During investigation, the damaged fuel line was discovered and was determined to be the source of contamination. The local municipality filed suit against the contractor for 3rd party claims and cleanup expenses totaling over $2.7 million. The insured also accumulated additional legal expenses and was eventually forced out of business due to the loss. 
    3. The concrete secondary containment of a 5,000-gallon gasoline aboveground storage tank located at a drilling contractor’s main office and yard was cracked when it was struck by a piece of equipment.  The incident was not reported and at a later date, a release from the tank spilled 3,000 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 $180,000.  
    4. A directional drilling contractor was drilling a new utility channel. The drill passed through and exacerbated a preexisting-unknown pollution condition that had been contained by the clay. The drill allowed contaminants to spread into the surrounding soils. Remediation expenses totaled over $150,000.
    5. 6-months after completing the drilling and installation of a pipe carrying natural gas, pressure in the pipe began to decline. After further inspection, it was found that a leak in the pipe was allowing natural gas to spread into the surrounding soils. The owner of the property filed suit against both the general contractor and the drilling contractor. Even though the drilling contractor was not held liable for the loss, they still accumulated over $50,000 in legal expenses fighting the claim.  
    6. A trenchless boring contractor was installing a new pipe through a layer of clay that contained unknown contaminants. While the clay was staged on the job site, heavy rains started, which allowed the contaminants in the clay to migrate offsite.  EPA fines and remediation expenses were in excess of $250,000. 
    7. A drilling contractor caused a release of raw sewage in both soil and groundwater after failing to identify a sewer line before drilling.  The cleanup entailed the excavation of several tons of soil ad caused nearby businesses to be shut down for a few days when their basements filled with raw sewage.  Substantial claims were filed for business interruption and cleanup costs.

    Overlooked Benefits of Environmental Liability Insurance

    Because environmental losses are a severity risk, rather than a frequency risk, the majority of directional drilling contractors lack the financial strength to self-insure their potential environmental liabilities. Since every directional drilling 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 the clean-up costs are far less than other costs that often arise from the loss. 

    Overlooked Benefits environmental liability insurance offers:  

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

    Environmental Liability Insurance Coverages

    Contractors Pollution Liability (CPL)

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

    Transportation Pollution Liability 

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

    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.  

    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. 

  • Demolition 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 A&A Custom Crushing 

    Include, but are not limited to: puncturing unknown underground storage tanks or utilities; release of oils/fuels from equipment; PFAS; Silica; spills from mobile storage tanks; excavating through and/or spreading of unknown preexisting contaminated soil; using unknown contaminated material 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; products pollution liability; raw materials stored and utilized in large quantities (i.e. acids, bases, compressed gases including cyanide and hydrogen chloride, diesel fuel and lubricant oils, flammable paints and solvents);  uncertainties about the historical use and conditions of property; obsolete and remote equipment storage (bone) yards where contaminants percolate into the soil/groundwater; nuisance odors;  no emergency response training for employees; halon releases from fire suppression equipment; spills and leaks from the storage and handling  (loading/unloading) of material containers such as drums, totes or bags from vehicles and/or rail cars; improper characterization of hazardous waste…       

    Environmental Loss Examples

    1. A crushing contractor unknowingly spread petroleum-contaminated material across a project site during operations for a commercial development. 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. 
    2. A concrete demolition 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. 
    3. 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.
    4. A demolition contractors hydraulic hose on a crane broke which resulted in a pipe falling and hitting an above ground storage tank and cracking the secondary containment.  The contents were released and migrated into the ground and onto neighboring properties.  Cleanup along with legal fees and third party business interruption claims exceeded $2,000,000.  
    5. A demolition contractor had a 10,000-gallon diesel above ground storage tank on their premise to fuel their equipment.  The concrete secondary containment of the aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the ground and onto neighboring properties.  Total cost for investigation, removal, and disposal exceeded $320,000. 
    6. A concrete recycling contractor hauled material from a jobsite that contained unknown contaminants. While transporting the material, heavy rains started, which allowed the contaminants in the material 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. 
    7. A concrete recycling contractor that was hauling material 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. 

    Crushing and Project Waste Management companies generally lack the financial strength to self-insure their environmental liabilities.  Since this insured has a number of environmental exposures, consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of their 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 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 contactors lies in who they are doing business with.  If there is an environmental loss at a job site, innocent contractors can and do get named in lawsuits.  Do your subs/vendors have CPL insurance if they cause an environmental loss?

    Environmental Impairment Liability (EIL) 

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

    Coverage can include: Pre-existing unknown pollution, new pollution conditions, first party on-site clean up, third party bodily injury, property damage, business interruption and extra expense, off site 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 have the ability to financially handle a release from an underground storage tank. The responsibility encompasses the ability to pay funds for corrective action and third-party bodily injury and property damage from non-sudden and sudden and accidental releases from a regulated underground tank system.  

    Property Transfer Liability 

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

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

  • Dairy 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. 

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

    Environmental Exposures Impacting Dairy Distributors 

    May include, but are not limited to; Pollution liabilities that occur while transporting cargo;  Air emissions from refrigeration equipment;  Uncertainties about the historical use and conditions of property;  Spills from underground and/or aboveground storage tanks;  Pollution 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 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;  Accumulated old tires, batteries, equipment…;  Raw materials stored;  Inadequate or no auditing of hazardous and non-hazardous waste handlers;  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;  Illegal dumping of waste on your property by unknown 3rd parties;  Pollutants from neighboring properties migrating onto yours and more…

    Environmental Claims Scenarios

    1. A milk delivery truck got into an accident, causing thousands of gallons of milk to escape from the tank and flow into a nearby stream. The milk depleted oxygen in the stream, causing a notable fish kill.  Total cost of remediation and natural resource damages cost the trucking company over $75,000. 
    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, which the previous owner used back in the 1940’s. The property owner had to remove and remediate the soils at their expense. Cleanup costs exceeded $400,000. 
    4. 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, 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 building owner 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.  
    5. An employee discovered several totes of unidentified waste that had been illegally dumped into the facilities dumpsters. The owner had the contents tested, at a cost of several thousand dollars. The totes were determined to contain hazardous waste, which were placed in the dumpster by an unknown 3rd party. The distributor’s cost to properly dispose of the waste exceeded $100,000. 
    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 distributor hired a waste hauler to transport its used motor oil. 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 manifested waste from cradle-to-grave, so the distributor had to pay their apportionment of the remediation costs which totaled $450,000.

    Overlooked Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting dairy distributors, pollution losses are not a frequency risk, but rather a severity risk. Since every dairy distributor has numerous environmental liabilities, consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy, versus self-insurance.

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

    Three Overlooked Benefits of Environmental Liability Insurance 

    • 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.

  • Dairy & Cattle Operations

    What is a Pollutant? 

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

    Commercial livestock operations should be aware that pollutants (such as manure, herbicides, fertilizer, etc.) 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?

    This Environmental Risk Assessment (eRA) offers a partial list of environmental exposures livestock operations may face.

    Environmental Exposures Impacting Dairy & Cattle Operations

    Include, but are not limited to; Storage, use and disposal of fertilizers, pesticides (Glyphosate), and herbicides;  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 equipment and supplies;  Faulty refrigeration units;  Overuse of irrigation;  On-site disposal of trash, garbage and other waste materials;  Old equipment storage yards; On-site compost piles, Wastewater lagoons or injection wells;  Historical contamination;  Natural resource damages;  Old or abandoned wells not properly closed allowing contamination into the soil and ground water;  Improper management of protected or sensitive areas like wetlands;  Vandalism;  Easements on the property (rail/roadways, pipelines, power lines, waterways) with potential environmental implications;  Uncontained floor drains;  In-ground sumps and pits;  Inadequate or no auditing of hazardous and non-hazardous waste handlers;  Spills and / or 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; Silica;  Pollution cleanup and liabilities that occur after a fire is put out….

    Environmental Loss Examples

    1. During an unusually heavy rainstorm, the wall of a farms on site lagoon used to treat cattle wastes collapsed.  More than 150,000 gallons of fecal waste flowed offsite, onto neighboring properties and into a river.  Waste cleanup costs exceeded $350,000, while third party damage claims exceeded $75,000.
    2. A property owner had his drinking water well tested prior to selling his land.  Testing revealed that the well contained an alarmingly high concentration of total petroleum hydrocarbons, further investigation revealed that the source of the contamination were several dozen drums of waste oil and maintenance fluids buried on a neighboring farm.  Though the drums were buried by the previous farm owner, the current owner was nevertheless responsible for disposal of the drums, soil and groundwater cleanup, and bodily injury and property damage claims submitted by the neighboring property owner.  Total cost exceeded $1,000,000 and caused the farmers bankruptcy.
    3. A dairy farmer was using treated wastewater as a fertilizer in a land application process.  He did not comply with permitting regulations nor did he have the wastewater tested prior to application.  After several months of application, heavy metals and high counts of e-coli were found in the soils.  The farmer was required to pay remediation costs in excess of $265,000.
    4. Over a period of several years, storm water from a livestock operation 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. 
    5. Phase I and Phase II environmental assessments involve limited sampling of a property and cannot guarantee that the property is clean. For example, a real estate limited partnership, acquired property previously used for farming on which they planned to build a mall. The firm hired a consultant to conduct a Phase I Environmental Assessment. The property was determined to be “clean.” However, when excavation for the mall began, 100 drums of buried pesticides and herbicides were unearthed. The chemicals contaminated the soil and had to be removed at the firm’s expense. Remediation and drum disposal costs exceeded $750,000 
    6. The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000.  

    Overlooked Benefits of Environmental Liability Insurance

    Since pollution losses tend to be a severity risk, versus a frequency risk, most cattle and dairy operations lack the financial strength to self-insure their environmental liabilities.  Since every Cattle & Dairy 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. 

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

    Environmental Liability Insurance Products

    Environmental Impairment Liability (EIL) 

    EIL is for livestock 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 overturn 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)

    Note:  livestock operations have potential environmental exposures from the vendors they hire to perform services, i.e. co-op services, mechanical, plumbing, HVAC, electrical, refrigeration, animal waste land application, herbicide / pesticide application, harvesting…).  Should your vendors cause an environmental problem or exacerbate an existing environmental issue their general liability insurance policy typically will have either an absolute or total pollution exclusion.  In order to be protected you should make sure your vendors have Contractors Pollution Liability (CPL) coverage before they begin doing work.

    CPL provides coverage should an insured, while performing their covered operations, cause or exacerbate a pollution liability while working at a 3rd party location.  For these contractors there is contractor’s pollution liability (CPL) coverage. 

    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.

  • Convenience Stores / Gas Stations

    What is a Pollutant? 

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

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

    Environmental Exposures Impacting Convenience Stores / Gas Stations  

    May included, but are not limited to: Leaking underground fuel and / or oil storage tanks; Historical contamination; Contamination caused by inventory stored on site; Contractors / engineers hired to perform services on your owned property; Spills during unloading of petroleum products; Storage of waste materials waiting to be transported for recycling / disposal; Unknown abandoned underground tanks; Storm water runoff; Vapor intrusion from neighboring properties; No auditing of waste handling and disposal companies; Poor information on the possible adverse reactions and interactions of chemical compounds and / or inventory that accidentally commingle during a fire; Customers accidentally driving off while pump is still running; Natural resource damages; Vandalism; and more…

    Environmental Claim Scenarios 

    1. A convenience store was subject to clean up cost in excess of $300,000 created while the local fire department was extinguishing a fire at the convenience store.  The fire started in the inventory storage room.  While the fire department was extinguishing the fire, inventory comingled creating a hazardous substance than ran offsite and into the storm water system releasing the hazardous substance into a nearby creek.  
    2. A gas station had a waste hauler that was transporting its used motor oil overturn and spills its load into a nearby stream.  Under CERCLA, the gas station 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 $600,000.
    3. Poor secondary containment; the concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000. 
    4. A family operated convenience store / gas station hired a contractor to remove two underground storage tanks and associated contaminated soil. During the course of storage tank removal, the contractor’s backhoe hit a natural gas pipeline causing an explosion. Third parties filed bodily injury claims against the contractor, as well as the owner whose building was destroyed in the explosion. Claims exceeded $2.5 million.
    5. During construction of a new convenience store an unknown leaking underground storage tank was discovered.  Cost to remediate the site was $125,000.
    6. An excavation contractor was subject to cleanup costs and business interruption expenses when they ruptured an unmarked petroleum pipeline while doing street and road work next to a gas station.  The loss of more than $700,000 forced the contractor out of business so the property owner had to pay the bill.
    7. While excavating for a foundation for a new convenience store, an unknown underground storage tank containing oil was ruptured. Hundreds of gallons poured out before the rupture was closed. Settlement costs for bodily injury, property damage, business interruption and cleanup costs totaled $1,500,000.
    8. An environmental contractor was hired by a convenience store to conduct an underground storage tank compliance inspection.  During the soil-gas survey process, the contractor punctured a diesel fuel line with a probe, causing 11,655 gallons of diesel to spill of which only 4,000 gallons were recovered.  Total claims for cleanup and business interruption exceeded $400,000.

    Overlooked Benefits of Environmental Liability Insurance 

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

    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

    Environmental Impairment Liability (EIL)

    EIL is for gasoline/service stations 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 and some can cover underground tanks.

    Transportation Pollution Liability  

    Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of their cargo. Broadened auto pollution liability (typically Form CA 9948) affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo.  

    Underground Storage Tanks

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

    Contractors Pollution Liability (CPL) 

    Note:  For convenience stores / gas stations, you have potential environmental exposures from the service vendors you hire.  Should your vendors cause an environmental problem or exacerbate an existing environmental issue their general liability insurance policy probably will have either an absolute or total pollution exclusion.  

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

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