Tag: manufacturing

  • Tool & Die Shops

    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 Tool & Die Shops

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

    Environmental Loss Examples

    1. During the night, an unknown party illegally placed drums of hazardous waste into a dumpster behind a tool & die shop.  The containers were not leaking, but the cost to properly dispose of the illegally dumped waste cost shop owner roughly $50,000. 
    2. While moving a large piece of equipment 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 $500,000. 
    3. A tool and die shop began expansion of the production line area. During excavation, oily soils with a petroleum odor were discovered. Further investigation uncovered an old, undocumented sludge-drying pit, which the previous owner used back in the 1940’s. The property owner had to remove and remediate the soils at his expense. Cleanup costs exceeded $400,000. 
    4. A tool and die shop stored bag house dust containing heavy metals in an uncovered dumpster behind the facility. Whenever it rained, storm water mixed with the dusts, forming a slurry, which ran off-site. Soil testing of a nearby stream bank showed high levels of lead, cadmium and mercury. The contaminant source was determined to be the dumpster run-off. The manufacturer was responsible for cleanup costs and natural resource damages exceeding $250,000. 
    5. An auto parts manufacturer had been removing oil and grease from their products prior to painting them. The metal goods were passed through a vapor bath of trichloronethylene (TCE), a common solvent.  During an environmental assessment it was determined the groundwater surrounding the plant contained significant concentrations of TCE and other solvents. The cleanup of the site was estimated to exceed $900,000. 
    6. Concrete trenches were used to transport plating line wastes to the on-site wastewater treatment system.  The high acidity of the wastewater degraded the trenches that allowed the wastewater to seep into surrounding soils.  Subsequently the soils and ground water were contaminated with heavy metals and solvents used in the plating process.  Testing in a nearby stream revealed that fish had high concentrations of metals in their systems as a result of the contamination.  Because fishing was prohibited a local environmental group submitted a class action suit against the platter for loss of enjoyment of the stream.  The group also submitted perceived bodily injury claims for ingestion of the contaminated fish.  Total claims exceeded $3.2 million.
    7. A manufacturer hired a waste hauler to transport their waste materials to a 3rd party disposal site. During transportation the hauler got into an accident, causing the truck to overturn and spills its load into a nearby stream.  Under CERCLA, the commercial insured must contribute for their apportionment of the load for cleanup cost since federal law states that you own your waste from cradle to grave.  Cost to settle the claim for the service station was $700,000. 
    8. A tool and die shop 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 shop’s process, and that the shop was not the source of the contamination. The shop was eventually released from the lawsuit. However, they had already expensed over $200,000 in legal defense costs. 
    9. A tool and die shop operated a machine, which was used to cut sheet metal. A portion of the machine was located beneath the floor. For more than 20 years, lubricating oil from the machines moving parts was released into the surrounding soils. When a nearby homeowner’s down gradient well used for potable water was tested, it contained total petroleum hydrocarbons. After further investigation, it was found that the tool and die shop’s property was the source of the pollutant. Total cost of remediation and 3rd party bodily injury claims exceeded $5,000,000. 
    10. The concrete secondary containment of a 10,000-gallon aboveground fuel storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The fuel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000.

    Benefits of Environmental Liability Insurance

    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 of the most overlooked benefits of investing in pollution liability insurance include; 

    Three Overlooked benefits of environmental liability insurance:

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

    Environmental Liability Insurance Products

    Environmental Impairment Liability (EIL) 

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

    Property Transfer Coverage

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

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

    Contractors Pollution Liability (CPL)

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

    Transportation Pollution Liability (TPL)

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

    Note:  Manufacturers have potential indirect environmental exposures from the service vendors they hire and products they purchase.  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.  

    How do you receive your raw materials?  Do you purchase the materials FOB point of shipment?  If you do, when your raw materials leave the shipping dock you are the owner.  What is your strategy if there is an accident while in transit and your raw materials cause a pollution loss?  

    Products Pollution Liability 

    Products Pollution Liability is for manufactures that make and/or distribute a product that if faulty could cause a pollution incident. This coverage can be written on a stand-alone policy, or included on an environmental impairment liability policy. For Environmental Insurance markets to consider offering this coverage, they typically prefer the product be intended for commercial use, as opposed to mass distribution to the general public. 

    Underground Storage Tanks

    Financial responsibility requirements ensure that owners and operators of underground storage tank systems 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.  

  • Manufacturers

    What is a Pollutant? 

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

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

    Environmental Exposures Impacting Manufacturers

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

    Environmental Claim Scenarios

    1. An auto parts manufacturer had been removing oil and grease from their products prior to painting them. The metal goods were passed through a vapor bath of trichloronethylene (TCE), a common solvent.  During an environmental assessment it was determined the groundwater surrounding the plant contained significant concentrations of TCE and other solvents. The cleanup of the site was estimated to exceed $900,000. 
    2. During the night, an unknown party illegally placed drums of hazardous waste into a dumpster behind a manufacturer’s facility.  The containers were not leaking, but the cost to properly dispose of the illegally dumped waste cost the manufacturer roughly $50,000. 
    3. While moving a large metal coil, a forklift operator hit a hydrofluoric acid aboveground storage tank releasing dangerous fumes into the neighboring community. Area residents and businesses were evacuated and several people were treated at the local hospital for fume inhalation. Claims for bodily injury and business interruption topped $100,000. 
    4. A manufacturer began expansion of the production line area. During excavation, oily soils with a petroleum odor were discovered. Further investigation uncovered an old, undocumented sludge-drying pit, which the previous owner used back in the 1940’s. The manufacturer had to remove and remediate the soils at his expense. Cleanup costs exceeded $400,000. 
    5. A manufacturer stored bag house dust containing heavy metals in an uncovered dumpster behind the facility. Whenever it rained, storm water mixed with the dusts, forming a slurry, which ran off-site. Soil testing of a nearby stream bank showed high levels of lead, cadmium and mercury. The contaminant source was determined to be the dumpster run-off. The manufacturer was responsible for cleanup costs and natural resource damages exceeding $250,000. 
    6. A manufacturer operated a machine, which was used to cut sheet metal. A portion of the machine was located beneath the floor. For more than 20 years, lubricating oil from the machines moving parts was released into the surrounding soils. When a nearby homeowner’s down gradient well used for potable water was tested, it contained total petroleum hydrocarbons. After further investigation, it was found the manufacturer’s property was the source of the pollutant. Total cost of remediation and 3rd party bodily injury claims exceeded $5,000,000. 
    7. A manufacturer stored incorrectly labeled drums of raw materials used for the manufacture of dry cleaning products.  One-day neighbors noticed a thick, whitish-yellow vapor cloud emanating from the vicinity of the drums.  The fire department was called and after reading the labels on the drums, they began to spray them with water.  This caused an explosion, followed by a thick smoke cloud of sulfur dioxide.  Forty plaintiffs filed three lawsuits to recover damages for injuries suffered from exposure to the sulfur dioxide cloud.  Damages topped $3 million.
    8. Concrete trenches were used to transport plating line wastes to the on-site wastewater treatment system.  The high acidity of the wastewater degraded the trenches that allowed the wastewater to seep into surrounding soils.  Subsequently the soils and ground water were contaminated with heavy metals and solvents used in the plating process.  Testing in a nearby stream revealed that fish had high concentrations of metals in their systems as a result of the contamination.  Because fishing was prohibited a local environmental group submitted a class action suit against the platter for loss of enjoyment of the stream.  The group also submitted perceived bodily injury claims for ingestion of the contaminated fish.  Total claims exceeded $3.2 million.
    9. A manufacturer hired a waste hauler to transport their waste materials to a 3rd party disposal site. During transportation the hauler got into an accident, causing the truck to overturn and spills its load into a nearby stream.  Under CERCLA, the commercial insured must contribute for their apportionment of the load for cleanup cost since federal law states that you own your waste from cradle to grave.  Cost to settle the claim for the insured was $700,000. 
    10. An Auto parts manufacturer was sued when contamination was discovered in the drinking water at a new residential development. After further investigation, it was determined that the discovered pollutants were not used as part of the manufacturers process, nor was the manufacturer’s property the source of the contamination. The manufacturer was eventually released from the lawsuit. However, they had already expensed over $200,000 in legal defense costs. 
    11. A manufacturing company performed routine drum washing operation.  Overtime, solvent laced wash migrated through cracks in the concrete and into the subsurface soils and groundwater.  The plume of solvents traveled off site and contaminated a nearby municipal water supply well.  Costly remedial technology had to be implemented to provide drinking waste.  The municipality filed suit against the manufacturing company for cleanup costs and property damage.

    Benefits of Environmental Liability Insurance

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

    Three Overlooked benefits of environmental liability insurance:

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

    Environmental Liability Insurance Products

    Environmental Impairment Liability (EIL) 

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

    Property Transfer Coverage

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

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

    Contractors Pollution Liability (CPL)

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

    Transportation Pollution Liability (TPL)

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

    Products Pollution Liability 

    Products Pollution Liability is for manufactures that make and/or distribute a product that if faulty could cause a pollution incident. This coverage can be written on a stand-alone policy or included on an environmental impairment liability policy. For Environmental Insurance markets to consider offering this coverage, they typically prefer products be intended for commercial use, as opposed to mass distribution to the general public. 

    Underground Storage Tanks

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

  • Beverage 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 Beverage Distributors 

    May include, but are not limited to; Pollution liabilities that occur while transporting cargo;  Spills from underground and/or aboveground storage tanks;  No secondary containment for above ground storage tanks;  Vapor intrusion;  Pollution cleanup costs after a fire;  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;  Accumulated old tires, batteries, equipment…;  Raw materials stored;  Inadequate or no auditing of hazardous and non-hazardous waste handlers, transporter and disposal companies;  Adverse reactions of materials that commingle during a fire;  Stormwater runoff;  Utilities that cross your property;  Corroded wastewater and storm water sewers;  Natural resource damages;  Asbestos;  Lead;  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. A fire ignited at a wine distribution facility. Water used by the fire department to extinguish the flames became contaminated by a toxic slurry like mixture from the melting materials inside the building. The high-pressure hoses forced the contaminants to flow off the property, which included a local stream. Emergency remediation contractors began investigating and found that the pollutants had entered the stream and had flowed downriver into a lake. The distributor was held liable for the claim, which included natural resource damages (including loss of aquatic life), investigation, remediation, 3rd party bodily injury from toxic fumes, and 3rd party business interruption claims as local businesses were forced to shut down during the cleanup. Total cost of the loss exceeded $6M. NOTE: fire departments are immune to pollution claims arising from their work while putting out fires.  
    2. Loading/unloading of products and material 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 drinking water until the local municipality could extend water services out to the surrounding residents.  
    3. 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.
    4. An employee at a beverage distribution facility discovered several totes of unidentified waste that had been illegally dumped into the facilities dumpster. 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. 
    5. A 1,000-gallon diesel aboveground storage tank used for the backup power generator for a liquor and wine 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.  
    6. 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.
    7. While transporting products over the road, the driver 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. 

    Overlooked Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting beverage distributors, pollution losses are not a frequency risk, but rather a severity risk. Since every beverage 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-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 Products

    Transportation pollution Liability 

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

    Environmental Impairment Liability (EIL) 

    EIL is for 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.

    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.

  • There Are 532 Superfund Sites in Indian Country! How many contaminated sites don’t we know about?

     environmental Strategist™, between the lines:  My question after you read the article below is how many contaminated sites don’t we know about?

    Under CERCLA you are responsible for the environmental condition of your property.  What if a third party contaminates your property and they do not have the financial ability to correct the problem?  Your asset has just become a liability.

    Contamination from third parties can come from air, water, soil, ground water or just over the surface of the land and below are real life examples.

    While this article points out that 25% of Superfund sites are on Tribal land, the other 75% represent and even greater impact on human health and the environment.

    Environmental Strategist™ Risk Management Tip:  Environmental insurance can protect real estate owners if third parties contaminate their property.

    Environmental Trivia Question:  Where are the highest concentration of Superfund Sites in the United States?  Answer below article.

    Kill the Land, Kill the People: There Are 532 Superfund Sites in Indian Country!

    Terri Hansen:  Indian Country Today – 6/17/14

    Of a total of 1,322 Superfund sites as of June 5, 2014, nearly 25 percent of them are in Indian country. Manufacturing, mining and extractive industries are responsible for our list of some of the most environmentally devastated places in Indian country, as specified under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the official name of the Superfund law enacted by Congress on December 11, 1980. 

    Most of these sites are not cleaned up, though not all of the ones listed below are still active. Some sites are capped, sealing up toxics that persist in the environment. In cases like the Navajo, the Akwesasne Mohawk and the Quapaw Tribe, the human health impacts are known because some doctors and scientists took enough interest to do studies in their regions. Some of those impacts may persist through generations given the involvement, as in the case of the Mohawk, of endocrine disrupters. 

    TheSalt Chuck Mine Superfund site in southeast Alaska operated as a copper-palladium-gold-silver mine from 1916 to 1941. Members of the Organized Village of Kasaan, a federally recognized tribe, traditionally harvested fish, clams, cockles, crab and shrimp from the waters in and around Salt Chuck, unaware for decades that areas of impact were saturated with tailings from the former mine. As if that weren’t enough, Pure Nickel Inc. holds rights to mining leases in the area and began active exploration to do even more mining in summer 2012, according to Ground Truth Trekking.

    The Elem Band of Pomo Indians, whose colony was built on top of the waste of what would become California’s Sulfur Bank Mine Superfund site in 1970, have elevated levels of mercury in their bodies, and now fear for their health. According to an NBC News investigation, nearby Clear Lake is the most mercury-polluted lake in the world, despite the EPA’s spending about $40 million over two decades trying to keep mercury contamination out of the water. Although the EPA cleaned soil from beneath Pomo homes and roads, pollution still seeps beneath the earthen dam built by the former mine operator, Bradley Mining Co. For years, Bradley Mining has fought the government’s efforts to recoup cleanup costs.

    The Washoe Tribe of Nevada and California requested EPA involvement in the cleanup of an abandoned open pit sulfur mine on the eastern slope of California’s Sierra Nevada that became the Leviathan Mine Superfund site. The Washoe Tribe had become concerned that contaminated waters were affecting their lands downstream, causing impacts to culture and health, environmental damage, remediation, monitoring and testing, posting of health advisories, drinking water, effects on pregnancy, and cancer. Aluminum, arsenic, cadmium, iron, manganese, nickel and thallium have beendetectedin surface water and sediment downstream from the mine. The U.S. Centers for Disease Control and Prevention (CDC) concluded that exposures could result in cancerous and non-cancerous health effects.

    The abandoned FMC phosphorus facility occupies more than 1,000 acres of the Shoshone-Bannock Tribes’ Fort Hall Reservation in Idaho, and lies within Eastern Michaud Flats Superfund site. The primary contaminants of concern at the site are arsenic, elemental phosphorous and gamma radiation. FMC left a legacy of contamination in the air, groundwater, soil and the nearby Portneuf River, which threatened plants, wildlife and human health on the reservation and in surrounding communities. The Shoshone-Bannock have long asked for a cleanup of contaminated soils, but instead the EPA’s 2012 interimremedyis to cap and fill, including areas containing gamma radiation and radionuclides.

    Answer to trivia question:  Silicon Valley

  • Following Fatal Blast, Metal Recycler Required to Invest in Modern Technology and Company-Wide Protections to Prevent Future Accidental Chemical Releases

    FOR IMMEDIATE RELEASE
    December 19, 2013

    Dale Kemery : kemery.dale@epa.gov 

    WASHINGTON – The U.S. Environmental Protection Agency (EPA) announced today that AL Solutions, a West Virginia-based metal recycler, has agreed to implement extensive, company-wide safeguards to prevent future accidental releases of hazardous chemicals from its facilities, resolving alleged Clean Air Act violations (CAA) stemming from an explosion at the company’s New Cumberland, W. Va. facility that killed three people.

    “Modern technology is making it easier to assess potential hazards and prevent disasters before they happen,” said Cynthia Giles, Assistant Administrator for the EPA’s Office of Enforcement and Compliance Assurance. “Facilities that handle extremely hazardous substances should be using these tools to protect their workers and those in surrounding communities. Today’s settlement makes this a requirement for AL Solutions, and we hope others take it upon themselves to do the right thing.”

    AL Solutions recycles titanium and zirconium raw materials for use as alloying additives by aluminum producers.  The company currently operates facilities located in New Cumberland and Weirton, W. Va.; Burgettstown, Pa; and Washington, Mo.

    In December 2010, three employees who had been handling zirconium powder at the company’s former plant in New Cumberland, W. Va. died following an explosion which may have been caused by an accidental release of the chemical. Debris from the explosion, which destroyed the production area of the facility, was scattered into the yards of local residents. Earlier this year, the company opened a new, automated facility in Burgettstown, Pa. which includes modern technology to safeguard employees and reduce exposure to hazardous metallic dust.

    The EPA estimates that the company will spend approximately $7.8 million to implement extensive measures to ensure compliance with environmental requirements, assess the potential hazards associated with existing and future operations, and take measures to prevent accidental releases and minimize the consequences of releases that may occur. In consultation with EPA, the company has already completed significant portions of the work required by the settlement and a prior administrative order.

    Among other requirements, AL Solutions must use advanced monitoring technology, including hydrogen monitoring and infrared cameras, to assess hazardous chemical storage areas to prevent fires and explosions. They must also process or dispose of approximately 10,000 drums of titanium and zirconium, or 2.4 million pounds, being stored at facilities in New Cumberland and Weirton, W. Va., both of which are overburdened communities, by December 2014 to reduce the risk of fire and explosion.

    he company will also pay a $100,000 civil penalty to resolve the alleged CAA violations documented during EPA inspections of the New Cumberland, W. Va. and Washington, MO facilities following the explosion. At the Washington facility, inspectors noted evidence of previous fires, burned insulation, fire-affected wiring, and titanium sludge covering large areas of the floor.

    PA’s complaint alleged that AL Solutions failed to conduct adequate hazard analyses, and failed to design and maintain the facilities to take account of the extremely hazardous substances there by providing safeguards consistent with industry codes and standards relating to these substances. The State of West Virginia is expected to file a separate complaint soon alleging that the company violated various provisions related to the unlawful storage of waste at the New Cumberland facility. The settlement will resolve those separate allegations.

    In a related action, AL Solutions recently agreed to pay the U.S. Department of Labor a total of $97,000 to resolve alleged violations of the Occupational Health and Safety Act (OSHA).  The OSHA settlement, which is subject to final approval by an Administrative Law Judge, requires expanded abatement measures that are consistent with the safeguards in EPA’s settlement to provide ongoing worker safety protection at the company’s four facilities. These measures require adequate fire detection systems, process hazard analyses for production areas, regular safety and health inspections, and restrictions on stockpiling combustible materials.

    ince the explosion, EPA and OSHA have coordinated their investigations and shared information, which has resulted in settlements designed to protect workers, communities, and the environment.

    The EPA’s proposed consent decree filed today in federal district court in the Northern District of West Virginia is subject to a 30-day public comment period and final court approval.

    For more information on the settlement: http://www2.epa.gov/enforcement/al-solutions-inc-settlement