By Sara Kooij, Renewal Broker
We are midway through the first quarter of 2018, and the past few months have demonstrated that environmental insurance is more available than ever. The number of insurance carriers writing business in this niche market is ever growing. As coverage becomes more readily accessible, recognition and understanding of this type of coverage is expanding. Our committed agents have been successfully identifying the most common environmental exposures, and in doing so are helping Beacon Hill build our book of business.
While 2017’s tragic string of natural disasters placed water-related pollution events at the forefront of our minds, with mold being the number one topic of conversation, clients who are not located on the beachfront or who have never experienced catastrophic flooding may not necessarily believe they have a mold exposure. They are often unaware of the plethora of non-mold related pollution exposures which can lead to equally costly claims.
We encourage our agency partners to consider some of the following overlooked exposures that may affect commercial, residential, or hospitality risks.
Unknown or Abandoned Meth Labs
AMC’s hit series Breaking Bad brought meth labs into the realm of popular culture. Still, when we think of meth labs we typically think of remotely-located dingy trailers. Most people certainly don’t comprehend how widespread these illegal labs have become, nor do they know how dangerous the chemicals are, even after the labs have been abandoned. Meth labs hide in plain sight all over the country, from motel rooms, to campgrounds, to rental properties, and vacant structures. Fabrics, clothing, carpets, wallpapers, and other furnishings can soak up the chemical residue which can be inhaled or absorbed through skin. Exposure to the associated chemicals can lead to nausea, difficulty breathing, coughing, chemical burns, and in worst case scenarios, even death. When a property owner finds that an illegal meth lab was abandoned on their property by a former tenant or guest, and that person cannot be located, the property owner will be left with the responsibility of cleanup. Cleanup can be extremely expensive as it must be performed by professionals. Contamination may not be limited to just the room or space that housed the lab. Chemicals may have been disposed of into the ground, storm and sewer systems, or septic systems, significantly spreading the area of contamination. While cleanup and inspection are occurring, the property owner will lose income for every day they are unable to rent out the space.
Step into any hotel chain and you’re likely to find placards on the walls outlining the company’s Green Initiative strategies. Energy saving efforts are certainly commendable, but they do have a few drawbacks. Green Initiatives often involve implementing low temperature technology which can encourage colonies of the bacteria legionella to multiply in water sources. When a building’s water system is contaminated by legionella, faucets, showerheads, pools, hot tubs, fountains, and humidifiers can distribute the affected water through mist and airborne droplets. Exposure via inhalation of these droplets can result in Legionnaires disease, a sometimes deadly form of pneumonia. An outbreak of Legionnaires disease will not only involve large compensatory damages, but also the cost to remediate the site. While investigation and remediation are taking place, the premises will need to be closed, resulting in loss of income and a potential public relations nightmare. If an outbreak occurs at a medical facility or nursing home where patients or residents are the most vulnerable, the damages can be astronomical.
Carbon Monoxide Poisoning
Carbon Monoxide Poisoning has made several headlines this year. In January, an entire family of four was found deceased at a cabin in Arizona. When a heating specialist identified a “significant failure” in the cabin’s heating system, it was established that carbon monoxide may have been the cause of death. Another January headline involved the multimillion dollar settlement related to the death of an 11-year old boy who died from carbon-monoxide poisoning at a Best Western hotel in North Carolina. In this instance, carbon monoxide leaked from a swimming pool heating system located on the floor below. In 2013, a similar event occurred at a Hampton Inn when several hotel guests alleged bodily injury due to carbon monoxide poisoning stemming from yet another faulty swimming pool heating system. In this case, the Oklahoma Supreme Court found (in Siloam Springs Hotel, LLC v. Century Surety Company, 2017 OK 14, 2017 WL 696815 (February 22, 2017)), that the Indoor Air Exclusion included in the hotel’s Commercial Lines Policy was applicable and therefore coverage for the loss was excluded.
As we all know, selling insurance is an uphill battle. To sell a product, agents first must sell the idea that something terrible might and probably will happen to their client. It doesn’t take as much convincing to sell that idea to owners of historically contaminated sites or hazardous storage warehouses. But for seemingly innocuous risks like hotels and condos, agents need to be prepared to thoroughly explain their client’s unique exposures along with the common pollution exclusions that may be found in their current insurance contracts. Please contact a Beacon Hill representative if you would like additional materials to supplement your discussions with your clients.
No two pollution policies are identical, and the way any would respond to the scenarios above is dependent on many factors. While the coverages we offer are designed to address these general issues, we make no guarantee or warranty that any individual policy we offer will respond to all issues as described herein. Please refer to the actual policy wording in each offered form to determine coverage applicability and acceptability. Beacon Hill is happy to prepare coverage comparisons upon request to help you develop a more complete risk management program for your clients.