Tag: automotive

  • Tire Sales & Service Companies

    What is a Pollutant? 

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

    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 most all commercial insureds exposed to potentially uncovered claims. What pollutants are impacting your business?

    Environmental Exposures Impacting Tire Sale & Service Companies

    May include, but are not limited to;  Leaking underground fuel and waste oil storage tanks; Untested underground fuel & waste oil/solvent tanks and pipes; Underground tanks which were removed/abandoned; Lack of information on existing and former underground tanks (e.g. age, contents, size, construction, cathodic protection, etc.); Poor housekeeping resulting in oil, fuel, and cleaning solvents being spilled;  Leaking grease traps or oil/water separators that seriously pollute the soils and/or groundwater;  Leaks from hydraulic fluid storage tanks;    Accumulated old batteries which contain leached acidic liquids;  Wastewaters flowing from service bays into the sanitary sewers;  Electrical equipment containing PCBs;  Wash waters from a car wash discharged into a storm sewer;  No auditing of waste handling & disposal companies;  Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire; Devaluation of property due to known or perceived pollution conditions;  Other pollutants include asbestos, lead, mercury, cadmium, oil, diesel, etc.

    Environmental Claim Scenarios

    1. During the night, a fire broke out at an auto service garage. As the fire department put out the fire, their high-pressure hoses forced melting plastics, metals, insulation, roofing, drywall, chemicals, oils, 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 auto garage was responsible for all clean-up costs, 3rd party property damage, 3rd party business interruption, and natural resource damages, which totaled over $5,000,000.  NOTE: fire departments are immune to pollution claims arising from their work while putting out fires.  
    2. A tire service station hired a waste hauler to transport their used materials, such as oils and lubricants, to a 3rd party disposal site. While in transport, the carrier got into an accident, causing the materials being hauled to spill.  Under CERCLA, the tire service 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 tire service station was $100,000. 
    3. A tire service and car wash garage had a wash bay’s piping system that released a substantial amount of cleaning solvents into soil and ground water.  The cost to remediate the soil and ground water cost $250,000.
    4. A tire service company 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 tire service company’s operations, not was their property the source of the contamination. The tire service garage was released from the lawsuit. However, they had already expensed over $60,000 in legal defense fighting the claim. 
    5. The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils and required costly excavation and removal. The total cost of the claim exceeded $320,000.  
    6. At a tire service station, hydraulic fluid from a vehicle lifts escaped and seeped into the ground. Because lifts can be below ground as well as above ground, hydraulic fluid leaks could easily go undiscovered for long periods of time. Fortunately for this insured, the leak was quickly detected. Total cost for environmental testing and cleanup was only $75,000. 
    7. An unknown party illegally placed drums containing liquid waste into a dumpster at a behind an auto repair & service garage.  The drums were not leaking, but the waste had to be properly disposed of. Cost to properly dispose of the waste was around $40,000. 
    8. While moving a shipment of tires, a forklift operator accidentally hit an anti-freeze fluid line. Cost to properly cleanup the antifreeze was roughly $25,000. 

    Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting tire sales and service companies, pollution losses are not a frequency risk, but a severity risk. Because all tire sales and service companies face 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, many insureds only consider the cleanup costs associated with a pollution event. However, often the cleanup costs are far less than other costs that can arise from the loss.

    Overlooked Benefits of Environmental Liability Insurance:  

    • Defense Costs:  Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong you can still get named in a suit and 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 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

    Premise Pollution Liability (PPL)

    PPL is for businesses that are susceptible to economic loss caused by pollution that actually or allegedly originated from their operations. 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. PPL can be offered on multiyear terms.  Most PPL policies cover above ground storage tanks.

    Transportation Pollution Liability (TPL)

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

    Contractors Pollution Liability (CPL)

    Contractors Pollution Liability (CPL) insurance protects the insured while performing contracting services in the field should they cause or exacerbate an environmental condition. This coverage would be applicable for auto / equipment repair & service operations that provide “in the field” services at their customer’s locations.  

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

    Underground Storage Tanks (UST)

    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. 

  • Auto Salvage Yards

    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 Auto Salvage Yards  

    Automobile parts cover a variety of segments, each facing their own unique environmental exposures, including metals, ceramics, plastics, rubber, textiles, batteries, electronics, oils, lubricants, etc.  Many of these segments utilize hazardous materials that produce hazardous wastes, & must be handled properly throughout the salvaging process.                                                                                                          
    Environmental exposures may include, but are not limited to: Soil and/or ground water contamination from mercury, lead, cadmium, asbestos, oil, anti-freeze, hydraulic fluids, gas or diesel fuel, PCB’s, solvents etc.; Devaluation of property value due to a buyer’s concern of known or perceived pollution conditions;  Pollution conditions as a result of a fire;  3rd parties illegally placing waste on your property (midnight dumping);  Storm water runoff; Releases from above ground or underground storage tanks; Inadequate secondary containment for above ground storage tanks;  Air emissions; Non-owned offsite disposal sites;  History of on-site spills; Transportation of potentially hazardous materials/wastes;  Inadequate auditing of hazardous and non-hazardous waste handling and disposal contractors;  Loading and unloading from trucks over unsealed ground;  Older equipment;  Legal defense for 3rd party nuisance claims;  and more… 

    Environmental Claim Scenarios 

    1. After a river experienced a sudden, major fish kill that left 61 tons of fish dead, EPA officials traced the source of contamination to a nearby scrap yard that stored hazardous waste in 55 gallon drums.  During a heavy rain, the ground washed away under the barrels releasing the contents. The scrap yard was found liable for clean-up, third-party damages, and natural resource damages. Total cost of the claim exceeded $10,000,000. 
    2. A scrap yard had been in operation since 1947. Over the years, numerous owners used underground storage tanks to store petroleum products. Local residents began to complain about the quality of their water. Testing revealed petroleum contaminants in the groundwater and identified the scrap yard as the source of the pollution.  Further investigation revealed that underground storage tanks had succumbed to corrosion and cracking.  The contaminated groundwater entered breaks in nearby water distribution lines, polluting the drinking water supply.  The scrap yard paid out over $5,000,000 in clean-up costs, and 3rd party bodily injury claims. 
    3. An auto salvage yard hired a waste hauler to transport their waste to a 3rd party disposal site. During transportation, the hauler got into an accident, causing the truck to overturn and spills its load into a nearby stream.  Under CERCLA, commercial insureds must contribute for their apportionment of the load for cleanup cost since federal law states that you own your waste from cradle-to-grave.  Cost to settle the claim for the for the salvage company was $700,000. 
    4. At a 26-acre site used as an auto salvage yard the EPA discovered over 600 rusting buried drums of chemicals.  The barrels were illegally disposed on the property by the previous owner who had since passed away.  Nearby resident’s field suit for perceived bodily injury from drinking the contaminated ground water.  The auto salvage yard faced a multi-million lawsuit, alleging liability for bodily injury, property damage, and cleanup.
    5. An Auto Salvage facility caught on fire. The fire department’s high-pressure hoses forced melting plastics, metals, insulation, roofing, drywall, chemicals, and other materials to build up inside the building’s foundation, creating a toxic “sludge”. Some of the “sludge” escaped the building and migrated onto to neighboring properties. The property owner was responsible for clean-up, 3rd party property damage & business interruption, and natural resource damages, which totaled over $3,500,000.  NOTE: fire departments are immune to pollution claims arising from their work while putting out fires.
    6. An auto scrap yard was sued when pollutants were discovered in the soil at a neighboring property. After further investigation, it was determined that the pollutants were due to industrial operations that took place on the property by a previous owner. Under federal law, real estate owners are responsible for the environmental condition of their property, regardless of who caused the pollution or when it occurred. Total cost of the remediation for the scrap yard exceeded $2,500,000. 
    7. A scrap yard routinely filled & stored barrels of waste such as fuel, oil, anti-freeze, paint thinners, metal cutting oil, and solvents….  While loading about 1,000 pounds of potentially hazardous waste onto a truck, five barrels slipped off the fork lift releasing the contents.  Fortunately for the scrap yard they had an emergency response plan in place, and their emergency response team contained the contaminants.  Cost of clean-up $70,000.
    8. When arriving at work one morning, an employee at an auto salvage company discovered that several totes of unidentified waste had been illegally placed on the property my unknown 3rd party during the night. The totes were not leaking, but had to be properly disposed of at the salvage yard’s expense, at a cost of over $50,000. 
    9. An auto salvage yard was sued when contamination was discovered in the drinking water at a new residential development. That the auto salvage yard was not the source of the contamination, and they were released from the lawsuit. However, they had already expensed over $100,000 in legal defense costs fighting the suit.  

    Overlooked Benefits of Environmental Liability Insurance

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

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

    Overlooked Benefits of Environmental Liability Insurance:  

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

    Environmental Liability Insurance Coverages

    Premise Pollution Liability (PPL)

    PPL is for automotive salvage yards susceptible to economic loss caused by pollution that actually or allegedly originated from their operations. This coverage is for those who own, operate, lease, or have any other insurable interest in real property and the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions.  Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site clean-up costs, legal defense expenses, non-owned disposal sites, transportation and more. PPL can be offered on multiyear terms.  Most PPL policies cover above ground storage tanks.

    Transportation Pollution Liability (TPL)

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

    Underground 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.  

    Pollution Prevention Strategies for Automotive Salvage yards

    • Cover all solvent containers and turn off your solvent sink when not in use. Solvent losses from evaporation and spills can range from 25 percent to 40 percent. 
    • Always use spring-loaded funnels/pumps to dispense & collect fluids such as antifreeze, solvents, & used oil. 
    • Recycle used oil, antifreeze and solvents. Recycle filters after drip draining or spinning out the oil. 
    • Use a filter on parts cleaners to extend the life of the solvent. Use dirty solvent when first cleaning parts. 
    • Consider using burnable absorbents to clean up used oil. Often your used oil hauler can recycle them as well as your used oil. 
    • Pre-rinse parts before using hot tanks or jet spray washers. 
    • Switch to a recirculating spray cabinet for cleaning parts instead of using solvent or hot tanks. 
    • Use solvent distillation service for solvent-based cleaners, which can be reused at a cost savings to your shop. 
    • Keep hazardous and non-hazardous wastes separate to minimize disposal costs. 
    • Maintain an accurate record or inventory to prevent overstocking of hazardous materials. 
    • Remove parts slowly after they have been in solvent tanks to prevent spillage. 
    • Use drip pads and pans to catch leaking fluids when working on vehicles. 
    • Immediately clean up spills with rags or dry absorbent. 
    • Store solvents and used shop towels in metal cabinets and keep away from heat sources.
    • Use a rag service for shop towels to reduce oily dumpster waste and a “throw it away” attitude.  
    • Seal floor drains to prevent materials from entering the sanitary or storm sewers. 
    • Don’t wash off your parking lots and garage bays into grease traps, sumps or storm drains. Keep run-off to a minimum by using dry cleaners and absorbents to clean up any spills.

  • Auto Dealers & Service Garages

    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 Auto Dealers & Service Garages

    Nationwide, car and truck dealerships, service stations, and garages take care of the maintenance and repair of millions of vehicles every year. In every area of vehicle servicing, repair, and body shop operations there is potential for environmental risk. Dealerships and garages are responsible for proper storage and disposal of their hazardous waste on site and at off-site treatment, storage or disposal facilities. Environmental Insurance provides the financial assurance needed for sustainability in today’s social/business environment. 

    Environmental exposures impacting car dealerships may include, but are not limited to;  Leaking underground fuel and waste oil storage tanks; Untested underground fuel & waste oil/solvent tanks and pipes; Underground tanks which were removed/abandoned; Lack of information on existing and former underground tanks (e.g. age, contents, size, construction, cathodic protection, etc.); Poor housekeeping resulting in oil, fuel, parts cleaning solvents, and paint being spilled on unpaved areas;  Leaking grease traps or oil/water separators that seriously pollute the soils and/or groundwater;  Leaks from elevator hydraulic fluid storage tanks;    Accumulated old batteries which contain leached acidic liquids;  Wastewaters flowing from service bays into the sanitary sewers;  Electrical equipment containing PCBs;  Paint residues from the body shop washed into storm drains; Wash waters from a car wash discharged into a storm sewer;  No auditing of waste handling and disposal companies;  Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire.  Some of the pollutants these operations are impacted by include asbestos, lead, mercury, cadmium, oil, diesel, etc.;  and more…

    Environmental Claim Scenarios

    1. An auto dealership had a wash bay’s piping system that released a substantial amount of cleaning solvents into soil and ground water.  The cost to remediate the cleaning solvents, soil and ground water cost $250,000.
    2. While working on renovations at an auto dealership, an excavation contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured and unmarked natural gas pipeline.  The contractor was forced out of business, leaving the property owner with the bill. 
    3. During the night, an unknown party illegally placed drums of hazardous waste into a dumpster behind at an auto dealership.  The containers were not leaking, but the cost to properly dispose of the illegally dumped waste cost the auto dealer roughly $50,000. 
    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, 3,000 gallons of which entered the surrounding soils. The total cost of investigation and remediation exceeded $200,000.  
    5. An auto dealer was expanding their showroom. During excavation, petroleum hydrocarbon contamination was discovered in the soil.  Cleanup costs exceeded $200,000. 
    6. A service garage had a waste hauler that was transporting its used motor oil overturn and spills its load into a nearby stream.  Under CERCLA, the service 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.
    7. During the night, a fire broke out at an auto dealership. As the fire department put out the fire, their high-pressure hoses forced melting plastics, metals, insulation, roofing, drywall, chemicals, oils, 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 auto dealer was responsible for all clean-up costs, 3rd party property damage, 3rd party business interruption, and natural resource damages, which totaled over $5,000,000.  NOTE: fire departments are immune to pollution claims arising from their work while putting out fires.  
    8. An auto dealership 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 auto dealer’s operations, so the auto dealership was not the source of the contamination, releasing them from the lawsuit. However, the auto dealership had already expensed over $75,000 in legal defense fighting the claim. 

    Overlooked Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting auto dealers, pollution losses are not a frequency risk, but rather a severity risk. Because all auto dealers 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 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 businesses that are susceptible to economic loss caused by pollution that actually or allegedly originated from their operations.  Sometimes referred to as pollution legal liability this coverage is for those who own, operate, lease, or have any other insurable interest in real property and the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions.  Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site cleanup costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multi year terms.  Most EIL policies cover above ground storage tanks.

    Transportation Pollution Liability (TPL)

    Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of their cargo. 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 Storage Tanks (UST)

    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)

    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.

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

     

  • Auto / Equipment Servicing & Repair Garages

    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?

    The Need for Environmental Insurance

    Nationwide, auto / equipment service stations & repair garages take care of the maintenance and repair of millions of vehicles every year. In every area of vehicle servicing, repair, and body shop operations there is potential for environmental risk. These insureds are responsible for proper storage and disposal of their hazardous waste on site and at off-site treatment, storage or disposal facilities. Environmental Insurance provides the financial assurance needed for sustainability in today’s social/business environment.   

    Environmental Exposures Impacting Auto Servicing & Repair Garages

    Include, but are not limited to;  Leaking underground fuel and waste oil storage tanks; Untested underground fuel & waste oil/solvent tanks and pipes; Underground tanks which were removed/abandoned; Lack of information on existing and former underground tanks (e.g. age, contents, size, construction, cathodic protection, etc.); Poor housekeeping resulting in oil, fuel, parts cleaning solvents, and paint being spilled on unpaved areas;  Leaking grease traps or oil/water separators that seriously pollute the soils and/or groundwater;  Leaks from elevator hydraulic fluid storage tanks;    Accumulated old batteries which contain leached acidic liquids;  Wastewaters flowing from service bays into the sanitary sewers;  Electrical equipment containing PCBs;  Paint residues from the body shop washed into storm drains; Wash waters from a car wash discharged into a storm sewer;  No auditing of waste handling and disposal companies;  Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire.  Some of the pollutants these operations are impacted by include asbestos, lead, mercury, cadmium, oil, diesel, etc.

    Environmental Loss Examples

    1. An auto service station had a waste hauler that was transporting its used motor oil overturn and spills its load into a nearby stream.  Under CERCLA, the service 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. 
    2. A waste system for an auto body shop released contaminates into a nearby neighborhood’s drinking water.  The local regulatory agency designated the body shop as a responsible party.  The contribution to settle the claim was $340,000.
    3. An automobile garage had a wash bay’s piping system that released a substantial amount of cleaning solvents into soil and ground water.  The cost to remediate the cleaning solvents, soil and ground water cost $250,000.
    4. While working on renovations at an auto garage, an excavation contractor ruptured and unmarked natural gas pipeline.  The contractor was liable for the costs associated with the cleanup, project delays, and two weeks of interrupted business sustained by the auto garage while the situation was being handled. The contractor did not have Contractors Pollution Liability insurance. Due to the size of the claim the contractor was forced out of business, leaving the auto garage with over $75,000 in lost revenue and clean-up costs.  
    5. The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000.  
    6. An unknown party illegally placed drums of liquid waste into a dumpster at a behind an auto repair & service garage.  The drums were not leaking, but had to be properly disposed of. Cost to dispose of the drums exceeded $20,000. 
    7. While moving a large metal coil, a forklift operator hit a hydrofluoric acid aboveground storage tank releasing dangerous fumes into the neighboring community. Area residents and businesses were evacuated and several people were treated at the local hospital for fume inhalation. Claims for bodily injury and business interruption topped $94,000. 
    8. An auto garage’s outdoor scrap yard routinely fills and stores on-site barrels of waste such as fuel, oil, anti-freeze, paint thinners, metal cutting oil, and solvents….  While loading about 1,000 pounds of potentially hazardous waste onto a truck, five barrels slipped off the fork lift releasing the contents.  Fortunately for the scrap yard they had an emergency response plan in place and their emergency response team was able to contain the contaminants.  Cost of clean-up $70,000.

    Overlooked Benefits of Environmental Liability Insurance

    Auto / Equipment Servicing & Repair Garages generally lack the financial strength to self-insure their environmental liabilities.  Since every septic service provider 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 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 businesses that are susceptible to economic loss caused by pollution that actually or allegedly originated from their operations.  Sometimes referred to as pollution legal liability this coverage is for those who own, operate, lease, or have any other insurable interest in real property and the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions.  Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site cleanup costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multi year terms.  Most EIL policies cover above ground storage tanks.

    Transportation Pollution Liability (TPL)

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

    Contractors Pollution Liability 

    Contractors Pollution Liability (CPL) insurance protects the insured while performing contracting services in the field should they cause or exacerbate an environmental condition. This coverage would be applicable for auto / equipment repair & service operations that provide “in the field” services at their customer’s locations.  

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

    Underground Storage Tanks (UST)

    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.