All Policies are Not Created Equal

By Tracy Durham, Associate Account Executive

In the pollution market, just as in the standard insurance market, policies are not necessarily the same even though they attempt to address the same exposures. While in some cases an insured may be comfortable with a limited coverage form, it’s good to make them aware of the policy limitations so they can make an informed choice about the coverage they purchase. Remember that policy exclusions are not the only way to limit coverage and they are not always found under the exclusion section of a policy form.

I wanted to focus on some examples of exclusions and limitations I’ve encountered on various risks. The examples are not meant to be all inclusive and you should always look at the quote and policy forms you receive in order to determine the limitations of coverage.

Property Damage (PD) exclusion.

This is included on policies for chemical application―herbicides, pesticides, and fertilizers for example. This is an exclusion that can be found on the Contractors Pollution portion of the policy and not all companies respond the same way. Some companies, depending on the risk, may choose not to include the exclusion on these contractors; however, many carriers do add this exclusion. Some carriers will exclude PD but not in the case of an overspray situation where the product lands on nearby property, causing damage. Other carriers will exclude the PD regardless of whether or not it is applied to the intended target or overspray is involved. Always be sure to read the language on the form and endorsements.

Storage tank policies.

While these policies mostly achieve the same goal, coverage for releases related to tanks and in some cases Financial Responsibility fulfillment, they do not always offer the same coverage. Examples of items that may be limited or not included on tank policies include loading and unloading of fuel, release of contents triggered by government requirement, and business interruption. Again there are other items to look out for on these policies, but these are some differences we see on a regular basis. Also, if you have a Premises Pollution Liability policy that incorporates the storage tank at a particular location, be sure any financial responsibility requirement is being met by that coverage.

Choosing the correct coverage to address the insured’s needs.

Often, the insured is just looking for coverage to fulfill a contract or lease agreement, so they may not be interested in covering the other exposures. It’s still important to explain what risks they may be self-insuring if opting for one type of coverage but not another. This type of choice can be found when choosing a storage tank only policy over Premises Pollution, which can address pollution conditions caused by more than just the storage tank. Also if you have an insured with a place of business that may include potential pollution sources and they also deliver and/or install goods at other locations, they should consider Contractors Pollution for the services performed at a jobsite, Premises Pollution for their own location, and Transportation Pollution for the over the road exposure.

It is important to remember that all coverage is not the same and an understanding of all exposures faced by your insured, as well as exactly what a policy may be addressing, are essential in assessing the needs of your clients. For more information, please contact us.