Contractors who work with hazardous substances on a regular basis, as well as consultants who assess the effects of contaminants, have always required specialized coverage. As the environmental insurance marketplace has expanded, many of these firms have found that coverage is readily available. The challenge, and the opportunity, is deciding if the coverage is right for them and if it will bring them the greatest competitive advantage.
Three principal issues are crucial to examine when working with environmental contractors and consultants:
- Does the program provide the proper coverage for the insured’s services?
- Are the covered operations being offered broad enough?
- Can the environmental coverage be packages with any supporting lines?
While it may seem obvious to ask if the coverage is actually there, the reality is that it is a question that always needs to be addressed. There are a number of well known and respected carriers that exclude tank work, lead paint, asbestos, mold, silica, etc. from their programs. It is not prudent to depend on an underwriter to tell you that coverage is not there—a careful review of the form is needed.
In a softening market, the change in covered operations from one carrier to another can be huge. Some carriers use a general catch phrase while others zero in on specific actions. Either way, it is important that the insured agrees with the method and descriptions used. An inexpensive policy that excludes a lot of the insured’s operations may be just as bad as no coverage at all.
Packaging coverages together is a powerful tool for providing better coverage for an insured. Instead of having one carrier on the General Liability and another on the Pollution, writing them together whenever possible is encouraged. Pollution coverage is needed because of an exclusion in the General Liability policy to begin with; therefore, it makes sense to eliminate gray areas if possible by having the same company write both. In addition, wholesale brokers are often successful in writing the supporting Auto, Excess, Professional, and Workers Compensation on these accounts. This enables the insured to have a broader relationship with the company, providing several defined benefits over time.
By taking the initiative to talk with insureds about their insurance options and the potential for improvement in their policies, agents will add value to these accounts and make them more difficult for competitors to replicate or replace.