Tag: Food Industry

  • Vineyards & Wineries

    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 trucking companies 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 (except for fluids necessary to operate a vehicle). 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 Vineyards & Wineries

    Due to their operations, Vineyards & Wineries (V&W) face a wide array of environmental exposures.  The following offers a partial list of environmental exposures V&W may face:  Storage, use, disposal of fertilizers, pesticides, herbicides (Glyphosate)….;  disposal of wastes in lagoons, septic or leach systems;  leaking above ground and/or underground storage tanks;  air emissions from chemical applications;  storm water runoff;  storage of fuels, antifreeze, oil and hydraulic fluids;  spills from loading and unloading of farm equipment and supplies;  old equipment storage yards;  on-site compost piles;  historical contamination;  overuse of irrigation;  natural resource damages;  vandalism; inadequate or no auditing of waste handlers;  wastewater lagoons;  old or abandoned wells not properly closed allowing contamination into the soil and groundwater;  easements on the property (rail/roadways, pipelines, power lines, waterways) with potential environmental implications;  uncontained floor drains;  spills and air emissions from emergency power generator systems;  adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Siltation of nearby streams from improper erosion control management;  air emissions from refrigerants ….

    Environmental Loss Examples for Vineyards & Wineries

    1. Over the years, a winery 40-year-old wastewater treatment plant had been upgraded several times.  Improper closure of an on-site surface impoundment allowed gradual seepage into groundwater.  Constituents contaminated the underlying groundwater, which was a potable water supply for the neighboring community.  Groundwater cleanup and emergency water supplies for residents exceeded $350,000. 
    2. Several years after a vineyard was planted excessive algae and bacteria developed in a nearby stream and lake.  Riparian owners filed claims in excess of $1,000,000 against the vineyard for property and natural resource damages, perceived bodily injury and loss of enjoyment caused by excessive fertilizer runoff.  
    3. A broken seal in the refrigeration line allowed refrigerants to sicken several guests while touring the winery plant.  Injured guest and workers were taken to the local hospital for treatment.  Third part bodily injury claims were filed against the winery.  
    4. A new V&W acquired property previously used for farming.  An environmental site assessment determined the property to be “clean.”  When excavation for the winery began, the excavation contractor ruptured several drums of pesticides and herbicides that were illegally burred on the property.  Soil and ground water remediation along with drum disposal costs exceeded $1,000,000 
    5. The concrete secondary containment of a 5,000-gallon diesel aboveground storage tank failed when 4,000 gallons spilled into the containment.  The diesel caused soil and ground water contamination.  Total costs for investigation, removal/disposal and legal fees exceeded $400,000.  

    Benefits of Environmental Liability Insurance

    V&W generally lack the financial strength to self-insure their environmental liabilities.  Since every V&W is impacted by environmental liabilities consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy versus self-insurance.

    The three main benefits environmental liability insurance offers:  

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

    Environmental Liability Insurance for Vineyards & Wineries

    ENVIRONMENTAL IMPAIRMENT LIABILITY (EIL) 

    EIL is for V&W that own, rent, lease, operate or have any other insurable interest in real property (a fixed site facility like a vineyard, processing 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 clean up costs, legal defense expenses, transportation pollution liability, off site disposal coverage….  Multi year term policies can be negotiated. 

    PROPERTY TRANSFER COVERAGE 

    Note:  This coverage is designed for buyers or sellers of vineyards and wineries.

    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.      

    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 GROUND STORAGE TANKS 

    Financial responsibility requirements ensure that owners and operators of underground storage tank systems have the ability to financially handle a release from an underground storage tank. 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.  

    CONTRACTORS POLLUTION LIABILITY 

    Note:  V&W have potential environmental exposures from the vendors they 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 either an absolute or total pollution exclusion.  In order to be protected you should make sure your vendors have this insurance coverage before they begin doing work.

    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, off-site disposal coverage ….  

    PROFESSIONAL LIABILITY

    Note:  V&W hire professionals to perform environmental site assessments, (mold, radon, asbestos or lead testing, Phase I, II, or III site assessments, tank testing, soil, waste water, air emissions…) you should make sure these professionals  have this coverage in force before they begin working for you.

    Should a environmental engineer/consultant or analytical laboratory make an error or an omission in performing professional services for you they will need a E&O policy 

     

    including pollution for there to be coverage.  Some professional services could include Phase I or Phase II site assessments, All Appropriate Inquiry (AAI), air monitoring, lead and asbestos assessments, waste characterization, remedial action plans, water testing, mold survey’s, environmental training….

  •  Restaurants

    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 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 Restaurants 

    May include, but are not limited to:  Waste grease, fat or used cooking oil;  Pollution cleanup after a fire is extinguished;  Agricultural chemicals on / in food;  Cooking oil fumes (COFs);  Air emissions from cooking operations such as with Curry or open flames;  Products used for pest management;  Cleaning Chemicals;  Storm water runoff;   Pollution from neighboring properties migrating onto yours;  Vapor intrusion;  Contaminated well water;  Raw sewage backup or rupture;  Sick building syndrome;  Asbestos;  Lead;  Mold / Legionella;  Historic site conditions;  Aboveground and/or underground storage tanks;  Leaks from elevator hydraulic fluid storage tanks; Storage and use of landscaping chemicals (Glyphosate);  Natural resource damages;  Spills/releases during loading/unloading operations from trucks or other delivery devices; Waste handling and disposal operations;  No auditing of waste handling and disposal companies;  Possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire;  Language barriers with employees;  Easements that cross the property which may leak or spill hazardous materials;  Impacting underground utilities during construction;  Use of polystyrene foam products;  No emergency and spill control plans;  Waste Water from operations;  Release of refrigerants;  Contractors hired to perform services on your owned property (HVAC, refrigeration, landscaping, plumbing, etc.), and more… 

    Environmental Claim Scenarios 

    1. As the result of a fire, a restaurant was subject to clean up cost more than $400,000.  While the fire department was extinguishing the fire that started in the storage room, inventory commingled creating a hazardous contaminant that went into the local storm water system.  The contaminants also migrated onto neighboring properties.  Claims were for cleanup, third party bodily injury / property damage / business income.    
    2. A restaurant located in a food court, had an English speaking but not English reading employee accidentally mixed non-compatible chemicals for cleaning.  The fumes from the chemicals forced the evacuation of all the building tenants while clean up took place.  Third party bodily injury, property damage and business interruption claims exceeded $1M.
    3. A grease trap tank failed but it was not discovered until the restaurant was putting on an addition.  Excavators digging the foundation came across oily type soils.  Environmental engineers concluded the problem to be coming from the failed grease trap tank.  Cost to clean up the site and delays in construction cost the restaurant in excess of $400,000.
    4. Several chemicals comingled when an employee accidentally knocked them over in the storage room.  The chemicals created a toxic vapor cloud in the restaurant.  Guests were evacuated but several were hospitalized for inhalation of fumes.  Attorneys filed suit for third party bodily injuries.   
    5. A 1,000-gallon diesel aboveground storage tank used for the backup power generator for a restaurant 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 $110,000.  
    6. Legionella was discovered in the water supply of a restaurant.  The restaurant had to be vacated while their water system went through treatment for the Legionella.  Several guests sued for bodily injury from exposure to Legionella.  
    7. A restaurant was subject to cleanup costs and business interruption expenses when a contractor they hired for an addition ruptured an unmarked petroleum pipeline.  The contractor did not have Contractors Pollution Liability insurance so as the property owner the restaurant was responsible.  Total costs exceeded $700,000.  Lawsuits filed against the contractor caused for the contractor’s bankruptcy.
    8. An Indian restaurant shared an air conditioning duct with a retail fur store.  The air emissions from the curry soiled the furs and a claim was filed against the restaurant for damage to the furs.  The carrier denied coverage saying the curry was a pollutant and the court agreed and held the Indian restaurant responsible for the environmental liabilities created by the curry fumes.
    9. A Buffalo Wild Wings employee died and 10 others we hospitalized after being exposed to a cleaner (Super 8) inside the restaurant.  Authorities said Super 8 is a common cleaner used in the restaurant industry and is relatively safe when used correctly.  But, if it gets mixed with Ammonia, the solution emits a harmful gas call Chloramine.  The medical director for the National Capital Poison Center said Super 8 becomes dangerous when mixed with other chemicals.  

    Benefits of Environmental Liability Insurance

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

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

    Three Overlooked benefits of Environmental Liability Insurance:

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

    Environmental Liability Insurance Products

    Environmental Impairment Liability (EIL) 

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

    Property Transfer Coverage

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

    Transportation Pollution Liability (TPL)

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

    Underground Storage Tanks

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

    Note:  For Restaurants you have potential indirect environmental exposures from the vendors you hire to perform services.  Should your vendors cause an environmental problem or exacerbate an existing environmental issue their general liability insurance policy generally will have either an absolute or total pollution exclusion.  In order to be protected you should make sure your vendors have the proper environment insurance coverage before they do any work on your behalf.  Typically, Contractors Pollution Liability (CPL) insurance.

  • Food Processors

    What is a Pollutant? 

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

    Environmental Exposures Impacting Food Processors 

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

    Environmental Loss Examples

    1. A slaughterhouse disposed of all its waste down a floor drain.  The drain was connected to a storm sewer drain that led directly to a nearby stream.  A fish kill occurred as a result of high biological oxygen demand in the stream.  Under the Clean Water Act (CWA), a local environmental group filed suit for loss of the stream.  The slaughterhouse spent $750,000 remediating the problem.
    2. Over a period of several years’ storm water from a chicken processing plant entered a nearby stream and lake.  Due to excessive algae and bacteria in the lake nearby residents and businesses filed claims that exceeded $2,000,000 for property damage, loss of enjoyment and perceived bodily injury. 
    3. Pilgrim’s Pride Corp., and three business associates were fined $500,000 by the Texas Natural Resource Conservation Commission for alleged violations of the state’s air, water and waste standards.  TNRCC found at least four alleged instances of unauthorized wastewater discharges and three alleged nuisance orders instances at two processing plants owned by the Pittsburgh, Texas based Food Company.
    4. The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000.  
    5. A spill at a food processors facility allowed high levels of Alimet to enter the local wastewater treatment system. The Alimet killed the bacteria that process wastewater effluent in the system, causing almost undiluted ammonia to flow into the creek. Local authorities fined the food processor more than $550,000 for the spill, which killed over one thousand fish and other aquatic life in the creek. 
    6. A waste hauler was hired to transport waste materials to a 3rd party disposal site. During transportation the hauler got into an accident, causing the truck to overturn and spills its load into a nearby stream.  Under CERCLA, the food processor must contribute for their apportionment of the load for cleanup cost since federal law states that you own your waste from cradle to grave.  Cost to settle the claim for the service station was $700,000. 
    7. A food processor was sued when contamination was discovered in the drinking water at a new nearby residential development. After further investigation, it was determined that the pollutants were not used as part of the food processor’s operation, and that the processing facility was not the source of the contamination. The food processor was eventually released from the lawsuit. However, they had already expensed over $200,000 in legal defense and investigation costs. 

    Benefits of Environmental Liability Insurance

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

    The Three Main Benefits environmental liability insurance offers:  

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

    Environmental Liability Insurance Products

    Environmental Impairment Liability (EIL) 

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

    Transportation pollution Liability 

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

    Underground Storage Tanks

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

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

    Contractors Pollution Liability (CPL)

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

    Property Transfer Coverage

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

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

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

  • Food Distributors

    What is a Pollutant? 

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

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

    Environmental Exposures Impacting Food Distributors 

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

    Environmental Claims Scenarios

    1. While transporting products over the road, the driver for a food distributor got into an accident and overturned. The products being hauled escaped the trailer and ended up in a nearby stream. Costs for remediation and natural resource damages exceeded $85,000. 
    2. Loading/unloading of products and material was conducted over unsealed truck ramps.  Over a period of several years, ground water became contaminated from pollutants that were released from idling trucks and storm water runoff.  Since the ground water was the only source of drinking water for surrounding residents and the state environmental regulatory agency designated the distributor as the responsible party, the distributor had to pay over $1,400,000 in cleanup costs and supply suitable drinking water until the local municipality could extend water services out to the surrounding residents.  
    3. A facility began expansion of a production line. During excavation, oily soils with a petroleum odor were discovered. Further investigation uncovered an old, undocumented sludge-drying pit. The property owner had to remove and remediate the soils at his expense. Cleanup costs exceeded $400,000. 
    4. The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank used for a trucking fleet was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000.
    5. During the night, a distribution facility caught on fire. As the fire department put out the fire, their high-pressure hoses forced melted plastics, metals, insulation, roofing, drywall, laminate, stored products, and other materials to build up inside the building’s foundation, creating a toxic “sludge”. Some of the toxic “sludge” escaped the building and migrated onto to neighboring properties. The distributor was responsible for all clean-up costs, 3rd party property damage, and 3rd party business interruption, in addition to natural resource damages, which totaled over $2,000,000.  NOTE: fire departments are immune to pollution claims arising from their work while putting out fires.  
    6. A 1,000-gallon diesel aboveground storage tank used for the backup power generator for a distribution facility was in a concrete secondary containment that was cracked. A rupture of the tank spilled 700 gallons into the containment that seeped into the ground causing excavation and disposal of the contaminated soils along with engineering and legal fees exceeding $90,000.  
    7. A delivery truck got into an accident and caught on fire.  The burning cargo created toxic fumes and when the fire department put out the fire it created contaminant runoff that flowed into a nearby stream.  Cost to remediate the site and claims from third parties for bodily injury and property damage due to exposure to toxic fumes exceeded $800,000.

    Benefits of Environmental Liability Insurance

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

    Furthermore, most commercial insureds only consider the cleanup costs associated with environmental claims. However, the cost of cleanup in often far less than other costs that can be associated with a pollution loss. 

    Three Overlooked Benefits of Environmental Liability Insurance 

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

    Environmental Liability Insurance Products

    Environmental Impairment Liability (EIL) 

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

    Transportation Pollution Liability 

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

    Underground Storage Tanks

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

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

    Property Transfer Coverage

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

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

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

  • ‘New normal’: No one escapes pain in drought areas

    environmental Strategist, between the lines: Everything that exists on our planet is impacted by environmental exposures as the article below points out.  According to the report below “drought now covers about 38 percent of the lower 48 states”, so people living in drought areas are getting a real life experience just how precious a resource water is.

    We can’t control our environment but we can do a better job of utilizing the resources we need to live.  Since 99% + of species that have inhabited earth are extinct the odds say we better wake up or we won’t be smelling any roses.

    Our environment is creating demand for environmental Strategist™ much like computers created demand for IT professionals.  The big difference being one you can live without and one you can’t.  For a better life www.estrategist.com.

    Mark Koba | @MarkKobaCNBC , 5-20-14:

    The dry conditions in the western U.S. are so bad that even many of the companies that are thriving in the drought feel economic pain.

    Case in point—Limoneira, of Santa Paula, California, and one of the largest U.S. growers of lemons and avocados: It reached record revenue of $100 million this year thanks to higher prices brought on by a freeze in South America, said president and CEO Harold Edwards.

    Despite the higher sales, however, getting through the drought is costly, said Edwards, who noted that his firm constantly monitors its underground wells so as not to overuse them.

    “We have to do more water pumping, invest in sprinkler systems, and every extra irrigation costs us,” said Edwards, whose company has some 11,000 acres in agricultural production.

    eS factoid:  80% of the worlds fresh water is used for Agriculture.

    Analysts say that no matter what, farmers, businesses and consumers are going to feel the effects of the drought, and survival will mean shared pain through conditions that show no sign of letting up.

    “This is the new normal,” said Lori Anne Dolqueist, a partner at the law firm Manatt, Phelps & Phillips and an expert in California water regulations. “In terms of the drought, we can’t just expect to wait it out and pray for rain. We have to do a lot more through education on how we use water, stricter laws on water use and other means to get a handle on it,” she said. “And that means a tough conversation for everyone about water.”

    Severity of drought

    The current drought is not a new one. Various states have been in drought conditions for the last three to four years. But the severity of what’s happening now is alarming to many observers.

    For the first time in this century, the entire state of California is in a severe drought or worse, according to the U.S. Drought Monitor.

    Drought conditions in Oklahoma have farmers there expecting only 20 percent of their normal wheat yield this spring. States like Kansas Arizona, Nevada, New Mexico and Colorado are also caught in the grasp of extremely dry conditions.

    And a dearth of rain over the past four years in Texas has climatologists saying the state is suffering the worst drought conditions of the past 500 years. Dozens of Texas communities, especially in the southern part, are said to have less than 90 days of water, putting lives at risk.

    California’s drought will deal a severe blow to Central Valley irrigated agriculture and farm communities this year, and could cost the industry $1.7 billion and cause more than 14,500 workers to lose their jobs, according to preliminary results of a new study by the UC Davis Center for Watershed Sciences.

    Consumers are taking a hit as well: Prices for meat, eggs, fresh fruits and vegetables and other foods are on the rise, in large part because of the drought that has seized western states.

    The drought has an economic trickle-down effect that could leave some towns and communities devastated, said Umar Sheikh, an industry sector credit analyst at insurance firm Euler Hermes.

    “Without water, there are no crops, and you have an exodus of people moving out of the areas,” argued Sheikh. “That means less kids in schools, less tax money for the towns and more dependence on government assistance.”

    With weather conditions as they are, a whole new way of thinking about water use is necessary, said Wayne Tucker, founder of BIO S.I. Technology, which makes microbial soil that helps increase water nutrients and efficiency for agriculture.

    “Instead of planting 5,000 acres of a crop that could use thousands of gallons of water, we need to reduce crop planting to something like 2,000 acres, ” argued Tucker. “We’re not getting the sufficient rainfall we need to keep doing what we have been doing.”

    Lynn Wilson, academic chair at Kaplan University and an environmental researcher said it will take more than just shorter showers to help the situation.

    “We have to look at all kinds of methods to save and produce water, like desalination as expensive as that is, and reusing waste water,” she said.

    Preparation for drought conditions is key, said Euler Hermes’ Sheikh.That means bigger reservoirs for storing water when it rains so there’s enough to go around during dry spells, he said.

    An online wine-selling outlet, NakedWines.com, said it’s helping wine growers in California with its own relief efforts. CEO Rowan Gormley explained that NakedWines, which uses crowd funding from its customers to invest in wineries, allows those wineries to switch to producing other wines that aren’t threatened by the drought.

    The online outlet has also invested in wineries that have their own water sources. But the company’s efforts don’t help everyone—Gromley noted that it’s primarily premium wines whose growers have sufficient water, whereas the drought is a bigger concern for “entry-level wines sourced out of the Central Valley of California.” NakedWines doesn’t focus on those areas.

    ‘Share the burden’

    According to the most recent outlook, drought now covers about 38 percent of the lower 48 states. Most of the Texas and Oklahoma Panhandles, northeastern New Mexico, and southwestern Kansas received only a few tenths of an inch of rain from mid-April to mid-May, when precipitation is usually on the increase in this region.

    And drought persistence is highly probable along the West Coast and in the mountain areas of states such as Colorado, where summer is a relatively dry time of year and both surface and subsoil moisture almost always decline.

    Experts say even if there were huge amounts of rainfall in the months ahead, the drought won’t go away, and it’s time to look for new ideas.

    “Whole civilizations in the past have disappeared because of lack of water,” said Kaplan University’s Wilson. “We’re going to be fighting over resources like water and it’s time we looked at them as having limits.”

    —By CNBC’s Mark Koba.

  • Trawling: destructive fishing method is turning sea floors to ‘deserts’

     environmental Strategist™, between the lines:  Agriculture uses 80% of the worlds fresh water supply and it accounts for 70% of the contamination in our waterways.  Should we stop agriculture?

    The fact that each ones of us eats food means we support agriculture, therefore, each an everyone of us is a polluter.  The challenge we face is how can we pollute in a way that has the least amount of impact on human health and the environment?

    We can’t begin to answer that question until we are environmentally educated.  For businesses and business professionals, www.estrategist.com is your first step as a polluter to have the least amount of impact upon human health and the environment.

    From: Morgan Erickson-Davis, MONGABAY.COM,  Published May 29, 2014 01:30 PM :  Bottom trawling is a practice used by commercial fisheries around the world in which a large, heavy net is dragged along the ocean floor to scoop up everything in its path. Previous research has linked trawling to significant environmental impacts, such as the harvest of large numbers of non-target species, collectively termed “by catch,” as well as destruction of shallow seabeds. Now, a new study published in Proceedings of the National Academy of Sciences finds this method is also resulting in long-term, far-reaching consequences in the deeper ocean and beyond.

    diagram courtesy of FRDC Australia

    Trawling dates back to the 1300s, and it became widespread in coastal areas around the world after the industrialization of commercial fishing in the late-1800s. Bottom trawling targets commercially valuable species that live near the sea floor, such as cod, rockfish, and various kinds of squid and shrimp. Gear varies depending on the fishing outfit, but nets can be nearly as large as a city block and scoop thousands of fish and other marine animals in a single drag.

    Bottom trawling has one of the highest bycatch rates of all commercial fishing practices. In the North Pacific, the practice accounts for 18 percent of annual groundfish harvests, and 82 percent of the region’s discarded by-catch. At times, bycatch accounts for upwards of 90 percent of a net’s total catch.

    In addition to directly killing many fish and other marine species, studies have shown that bottom trawling is very destructive to the seabed. It dislodges sediment, which destroys the habitat of ground-dwelling organisms, makes the water more opaque and unsuitable for many species, and releases pollutants and carbon that had been trapped below the seafloor.

    As populations of many fish species dwindle due to intensive commercial fishing effort, bottom trawling outfits are searching for new fishing grounds in ever-deeper regions of oceans around the world. However, this new study indicates that deeper ocean bottoms are also being affected by trawling, as the nets destroy delicate seafloor ecosystems at a level akin to desertification.

    “Cumulatively, the impacts of trawling on the sediment structure, the benthic biodiversity, and the most basic of all of the nutritional resources in these deep-sea sedimentary ecosystems resemble the catastrophic effects caused by man-accelerated soil erosion on land, and the general environmental deterioration of abandoned agriculture fields exposed to high levels of human impact,” write the researchers, from various institutions in Italy and Spain.

    Continue reading at ENN affiliate, MONGABAY.COM.