A Holiday Reminder about Environmental Insurance

By Mike Tighe, Assistant Vice President

Think you’re clients don’t need a broad form Pollution policy? SANTA says otherwise! It’s not about whether your insureds are naughty or nice. Here’s a list―we checked it twice:

S – Silica

At least 1.7 million workers in the U.S. are exposed to silica. It is a natural occurring mineral that can be hazardous once disturbed. Quartz is a common form if crystalline silica and is a component of sand, stone, rock, concrete, brick, and mortar. Contractors that blast, cut, drill, grind and demo can result in worker inhalation of small silica particles in the air. These exposures may lead to the development of lung disease and lung cancer and can take a long time to develop. A Contractors Pollution policy can provide 3rd party Bodily Injury and Defense coverage.

A – Asbestos

Asbestos is the name given to a group of naturally occurring minerals that are resistant to heat and corrosion. Asbestos has been used in products such as insulation for pipes (steam lines for example), floor tiles, building materials, and in vehicle brakes and clutches. Heavy exposures tend to occur in the construction industry, particularly during the removal of asbestos materials due to renovation, repairs, or demolition. Breathing asbestos fibers can cause a buildup of scar-like tissue in the lungs and result in loss of lung function that often leads to disability and death. Pollution coverage for this exposure is available for contractor activities as well as for property owners/lessors and property managers. Gradual pollution coverage can be an effective solution for these clients. The Contractors policy can be offered on a claims made or occurrence basis. Insuring properties for this risk is almost always done on a Claims Made basis.

N – Non Owned Disposal site exposures.

Manufacturers byproduct and contractor’s waste can be a source of environmental liability. Waste water, waste oil, pesticides, paints, household cleaning disinfectants, medical waste, asbestos/lead containing materials, electronics, and batteries need to be disposed of properly. There are many different types of disposal facilities, including construction & debris, municipal solid waste, and inert waste, which will not decompose. Examples of inert waste are sand, drywall, and concrete. Contamination issues at these locations can put you out of business if not properly insured. Superfund liability is: 1. retroactive before the 1980 law’s inception. 2. Joint and Several – any potentially responsible party may be held liable for the entire clean-up of the site. 3. Strict liability – If a potential responsible party sent some amount of hazardous waste found at the site, that party is liable. Environmental insurance companies can consider insuring this type of risk. Coverage can be designated to a specific location or on a blanket basis, Claims Made or even on an occurrence basis. Some carriers will only provide clean up coverage for pollution conditions that emanate from the covered location.

T – Toxic mold

Mold is a fungus that grows both in indoor and outdoors and thrives in damp, warm, humid environments. There are over 3,000 varieties of indoor mold. It grows in all sorts of common building materials such as wood and paper products like wallpaper, ceiling tiles, drywall, and cardboard. It grows in fabrics such as carpets and upholstery. It can also be found in other building products including paint and insulation. While too much of any mold can be toxic, some mold like Stachybotrys chartarum & Aspergillis can produce molecular toxins called: myotoxins. Property owners and managers need to review their Property and General Liability policies to address 3rd party Bodily Injury and Property Damage/Clean Up claims. Roofing contractors and those working indoors are especially at risk for litigation.

A – Air pollutants

Other common airborne pollutants that can be insured under an environmental impairment policy include – lead paint dust/solvent fumes, legionella, radon, and low level radioactive materials. It is important that agents make their clients aware of these exposures and how their current insurance program may or may not respond. There are a number of different insurance companies offering coverage and it is important to review each carrier’s terms as no two policies are the same.