Why do Businesses Need Pollution Insurance?

Pollution insurance is designed to respond to claims stemming from the release of pollutants into the environment. These policies are needed to fill a gap in coverage created by the pollution exclusion in the standard CGL policy.

What is an Environmental Pollutant?

Standard CGL policies define a “pollution event” in part as “arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants…” This very broad definition of a pollutant creates significant exposures for many businesses.

Why is Pollution Insurance Important?

Pollution insurance will help fill coverage gaps and meet contractual requirements. In an environmentally conscious, litigious society, pollution coverage can provide legal defense to help protect the financial stability and reputation of a business. There is a wide range of quality, competitively priced environmental products to address the exposures many businesses face.

Pollution Insurance Products

The following is a list of coverages generally available through Beacon Hill Associates. Please note that many risks require a combination of these coverages to adequately address an insured’s environmental needs. Beacon Hill considers all environmental opportunities, large or small.

Contractors Pollution Liability
Contractors Pollution Liability/Professional
Packaged Insurance For Environmental Contractors & Consultants
Packaged Insurance For Environmental Facilities
Premises Pollution Liability
General Liabilities & Products Pollution Coverage for Manufacturers and Distributors
Energy-Related Coverage
Over The Road Pollution/Transportation Pollution Liability
Auto, Including Pollution
Workers Compensation, Including Pollution
Excess Insurance Coverage
Storage Tank Coverage
Enhanced Fuel Solutions

How Much Does Pollution Insurance Cost?

The cost of pollution insurance varies widely depending on the size and type of insured, limits being requested, claims history, etc. Our carriers evaluate the range of operational risks associated with the insured, geographic location, length of time in business, and other factors that may help to shape the account. The minimum premium for a monoline Contractors Pollution Liability account starts around $2,000; Site Pollution Liability starts at $3,000. Check out our other products and pricing here.

Selecting the Right Coverage and the Best Carrier Partnership

Properly crafted environmental insurance policies can address many of the exposures businesses face. It is very important to recognize that not all pollution policies are the same, and that many policies do not address all potential pollution problems. It is also important to recognize that all policies contain exclusions that can impact the degree of coverage provided. Common ones exclude claims resulting from intentional acts or willful noncompliance with environmental regulations.

What Does a Pollution Policy Cover?

Policies are structured in many different ways, but common elements of the coverage can include coverage for:

  • Third Party claims for Bodily Injury, Property Damage and Environmental Damages at, on or emanating from the insured site.
  • Cleanup costs for pollutants discovered at the insured site.
  • Emergency response expenses.
  • Business Interruption resulting from pollution events
  • Claims arising at non-owned disposal sites utilized by the insured
  • Claims related to the transportation of waste materials from the site

In addition, some carriers endorse their policies to provide even more enhancements, including:

  • Disinfection expense costs for response to CDC required cleanups.
  • Image restoration expenses
  • Coverage for claims related to transportation and disposal of hazardous waste
  • And more…

The key to purchasing effective coverage for these exposures is to work with insurance carriers that are experienced with the class and are actively seeking to write the business. Claims paying history, responsiveness, and service are key elements to be reviewed when deciding between carriers. Scope of coverage being offered can be significantly different between companies, so choosing carefully is important.

In order to get the best terms from industry-leading carriers, it is crucial for insureds to provide the right information. This is a class of business that requires unique information to underwrite. While some companies will provide indications of pricing based on limited information, to get the best coverage the insured needs to submit complete information. These items should include:

  • An environmental application
  • An SOV with details of all buildings
  • Property and CGL loss runs for the last five years
  • Copies of any environmental reports for the properties in question
  • Copies of the facilities “Mold Awareness” or “Water Intrusion” plans, if appropriate. These are becoming very important, as a water problem left untreated can turn into a mold problem. Some carriers will help the insured develop a plan, or put them in touch with a vendor that can help them do so.

With the significance of the losses this class is experiencing, finding the best possible coverage is well worth the effort.

For more information on environmental insurance or to discuss a specific account, please contact us.