By Larry Simmons, Assistant Vice President
What are Natural Resource Damages?
Natural resource damage is a little known coverage grant that should be included in all of your Pollution policies. Many insureds do not fully understand what natural resource damages are, or why they need to make sure it’s included in their policies. However, this coverage extension can become very important should an insured experience a pollution claim. According to the EPA, Both CERCLA (Comprehensive Environmental Response, Compensation and Liability Act) and OPA (Oil Pollution Act) define “natural resources” broadly to include “land, fish, wildlife, biota, air, water, ground water, drinking water supplies, and other such resources.”
Natural Resource Claim Scenarios
The most widely reported natural resource claims normally stem from some sort of pollution event that leads to a fish kill. A recent example of a fish kill occurred in our home office’s city Charlottesville, VA during the demolition of The University of Virginia’s University Hall (“U-Hall), which was the former stadium for UVA’s basketball team. Stormwater running off the demolition site of U-Hall and polluted the waters of a neighboring creek and killed hundreds of fish in the stream. The fish kill was the result of a contaminated construction pit that flowed into a stormwater system drain. The primary source of the contamination stemmed from construction pit on the former U-Hall site where rainwater had mixed with concrete dust and had been pumped into drain lines. The high alkaline levels caused by concrete debris killed hundreds of fish in Meadowcreek Gardens.
Runoff from construction sites, oil spills, over-turned vehicles leaking gas/oil, and manufacturing operations generating waste are all areas of concern when it comes to natural resource damages, with fish kills in particular. Another, lesser known natural resource damage issue is Boxwood blight. Boxwood blight is a widespread fungal disease affecting boxwood trees, caused by Cylindrocladium buxicola. Boxwood blight is normally introduced into landscapes on infested nursery stock. Spores of contaminant can easily stick to shoes, clothing, and shearing/pruning tools, so the disease can be spread very easily during routine maintenance. New outbreaks normally occur following shearing plants in summer. Moisture on leaves and twigs provides ideal conditions for infection by this fungus so years with high rainfall and extended summer temperatures result in greater disease incidence and severity. Imagine this scenario: You are starting up a new business and during the process of securing a building to serve as your main office, you decide to add some landscaping to improve the exterior look of the building. You unknowingly plant some boxwoods that have been infected with the blight fungus. Those boxwoods, in turn, infect plants of the neighboring buildings and kills all the vegetation, vegetation that your neighbors have spent thousands of dollars to maintain. This has now become a natural resource claim, that your normal GL or Property policy will not cover.
Coverage for Natural Resource Damages
Natural resource damages can prove to be very costly when it comes to insurance claims. If you are a landscaping contractor, you should make sure to have a Contractors Pollution Liability (CPL) policy that includes Natural Resource Damages as part of the definition of a pollutant. If you are a demolition or excavation contractor, it is imperative that you have a CPL policy to not only deal with potential natural resource damage claims, but to cover other exposures such as mold, runoff, disturbance of asbestos etc. If you are a business owner, it’s important to have a Site Pollution Liability policy that provides coverage for indoor air quality issues such as mold and legionella and also includes coverage for natural resource damages to address any sort of runoff or even boxwood blight scenarios. Beacon Hill can provide many Pollution coverage options to address all of these environmental exposures, including natural resource damages. For more information or to discuss a specific account, please contact us.
Information for this article was obtained from the following sources: