Environmental insurance is a billion-dollar industry with many opportunities—every account has a pollution exposure. By discussing environmental products that can effectively address these exposures, you will provide broader coverage for your client, highlight your agency’s professionalism, help secure future renewals, and generate more revenue on your accounts.
Like many industries, the insurance marketplace has changed significantly during the COVID-19 pandemic. Environmental carriers are not only looking at virus and communicable disease coverage (and exclusions), they are also seeing changes in businesses that are directly affected by the pandemic. Despite a slowdown in many industries this year, construction projects are going strong, with many redevelopment and new-build jobs underway. We have also seen an uptick in activity for wastewater treatment facilities, recycling centers, auto risks, and more.
What is Environmental Insurance?
Environmental insurance is designed to respond to claims stemming from the release of pollutants into the environment. These policies are needed to fill a gap in coverage created by the pollution exclusion in the standard CGL policy. Standard CGL policies define a “pollution event” in part as “arising out of the discharge, dispersal, release or escape of:
- Toxic chemicals
- Liquids or gases
- Waste materials
- Other irritants & contaminants
This very broad definition of a pollutant creates significant exposures for many businesses. These losses or damages typically arise in the form of claims against insureds for bodily injury, property damage, cleanup costs, and business interruption.
Insureds often think they have coverage for pollution releases under their General Liability and Property policies, however, in our experience, those policies either restrict coverage by having time-element clauses, exclude coverage for certain pollutants altogether, or do not provide enough limits to investigate a pollution-related claim, let alone provide enough limits to adequately respond to a claim or clean up a pollution condition.
The State of the Environmental Insurance Market
There are currently approximately sixty insurance companies offering environmental insurance products. These products have been designed for several broad business segments, including: site owners/operators, contractors & consultants, storage tanks, property transfer and lender liability, transportation waste and materials, products pollution, and manufacturing risks.
Examples of sector-specific policies include policies for healthcare facilities, educational facilities, real estate entities, and many others. Policies designed to respond to specific situations can include environmental policies over indemnifications, policies that facilitate transactions, policies that are excess over other environmental carrier forms in order to obtain additional limits, and policies that consist of combined General Liability and environmental forms with the goal of reducing coverage gaps, overlaps, and coverage disputes.
Job site/project policies include specific types of project policies such as restoration or green projects, and practice policies that can provide coverage for any project a contractor or professional works on during the year.
Types of Products
- Contractors Pollution Liability
- Contractors Pollution & Professional
- Packaged Insurance for Environmental Contractors and Consultants
- Packaged Insurance for Environmental Facilities
- Premises Pollution Liability
- General Liability & Products Pollution
- Storage Tank Coverage
- Energy-Related Coverages
- Auto, Including Pollution
- Over the Road Pollution/Transportation Pollution Liability
- Excess Coverages
Significant Environmental Regulations That Have Environmental Liability Provisions
There are numerous environmental regulations with which companies must comply. Not complying with these regulations could result in fines, penalties, and legal actions by environmental regulators or third parties. Some of the most notable ones that include environmental liability provisions are:
The Clean Air Act (CAA) is the comprehensive federal law that regulates air emissions from stationary and mobile sources. Among other things, this law authorizes EPA to establish National Ambient Air Quality Standards (NAAQS) to protect public health and public welfare and to regulate emissions of hazardous air pollutants.
The Clean Water Act (CWA) establishes the basic structure for regulating discharges of pollutants into the waters of the United States and regulating quality standards for surface waters.
The Resource Conservation and Recovery Act (RCRA) gives EPA the authority to control hazardous waste from the “cradle-to-grave.” This includes the generation, transportation, treatment, storage, and disposal of hazardous waste. RCRA also set forth a framework for the management of non-hazardous solid wastes.
The Comprehensive Environmental Response, Compensation, and Liability Act — otherwise known as CERCLA or Superfund — provides a Federal “Superfund” to clean up uncontrolled or abandoned hazardous-waste sites as well as accidents, spills, and other emergency releases of pollutants and contaminants into the environment.
*All definitions obtained from https://www.epa.gov.
Read about other environmental laws and executive orders HERE.
What does Environmental Insurance Cost?
The cost of pollution insurance varies widely depending on the size and type of insured, limits being requested, claims history, etc. Our carrier partners evaluate the range of operational risks associated with the insured, geographic location, length of time in business, and other factors that may help to shape the account. The minimum premium for a monoline Contractors Pollution Liability account starts around $1,000; Site Pollution Liability starts at $3,000. Check out our other products and pricing here.
What does an environmental underwriter do?
An environmental insurance underwriter closely works with a broker, agent, or insured to assess the insured’s pollution exposure risks. Based on the size of the insured’s business, number of years in business, previous loss history, and other factors, the underwriter will work to provide the coverage needed.
Why should insureds be interested in pollution coverage?
Insureds should be interested in pollution coverage because pollution losses are generally excluded from their General Liability and or Property policies. A pollution policy will protect insureds from a loss arising from their contracting work or their premises exposure, thus fixing the gap created by the exclusion in their GL or property policy.
How do I know if my insured is a fit?
For risks with an environmental focus, we can help with: CGL, CPL, Site Pollution, E&O, Auto, Workers Comp, and Excess
For risks with no specific environmental focus, we can help with: CPL, Site Pollution, Contractors E&O
Glossary of Terms
For an explanation of common pollution insurance terms and acronyms, please visit our glossary.
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