Biodigesters Use Environmental Insurance as a Risk Management Tool
Anaerobic biodigesters contain waste products in a sealed environment and have provided significant progress in reducing organic waste while generating energy from the waste byproducts. The facilities also create jobs and, in some instances, reduce agricultural odors. The federal government supports biodigesters as a green energy source. However, they also carry the risk of exacerbating environmental pollution, generating unpleasant odors, and carry the potential for volatile explosions due to poorly regulated gas build up. Businesses operating biodigester operations must meet regulatory compliance, build community trust, and provide financial protection in the event of an incident. Pollution insurance is an important part of this risk management strategy and can address remediation efforts, cover legal defense expenses, and compensate parties damaged if a pollution release occurs.
Despite federal and state support, some local communities continue to push back on biodigesters, especially in suburban and urban areas. Health and safety concerns, lack of information, an aversion to additional noise, and fear of odors and traffic are all potential reasons. These sentiments can make biodigesters particularly sensitive to scrutiny. Transparency, communication, and comprehensive pollution insurance coverage can improve community relations.
Despite the studies that support the benefits of disposing of waste and generating energy with biodigesters, facilities require community support, local education, transparency, and the highest levels of environmental responsibility through proper treatment, storage, maintenance, regulatory compliance, and environmental insurance.
Environmental insurance for Biogas and Biodigester Operations
There are special insurance risks and opportunities for insurance agents in this field. The basic nature of the biogas process involves many different volatile and/or toxic components which could be addressed in a Pollution policy.
A typical Commercial General Liability policy will not protect biodigester operators from third party bodily injury/property damage pollution claims. Depending on how the lawsuit is filed, the insurance company may also choose not to defend and cite the pollution exclusion built into the policy. An explosion, subsequent clean up, and restoration of the affected area may not be properly covered due to the hostile fire exclusion. A typical General Liability/Pollution Liability package policy can better protect these operations. Within this type of policy, the definition of a pollutant is extremely broad.
There is also environmental exposure pertaining to the transportation of biogas. And the treated residual digestate is a byproduct rich in nitrogen which is often used as fertilizer and other soil amendments. There are pollution risks associated with applying this material on crops/farmland, especially near water sources. Read more about insuring biogas operations.
Beacon Hill Associates has written a number of bidigester accounts and can offer several lines of coverage for these insureds. Please contact us for more information or to discuss an account.
Type: Blog
