Massive oil spills. Chemical leaks from large factories. Air pollution from coal mining. Toxins from landfills affecting nearby populations. Mention “environmental liability” and these kinds of headline-making events are probably what spring to mind.
But do you think of pollutants from lawn fertilizers used by a municipality? Gas released from chlorine stored in a warehouse? Particles released by a manufacturer using a 3D printing process
? Emissions from refrigeration systems at a food processing facility? Or groundwater contamination from a dry cleaning facility?
These are just a few of many scenarios that could affect businesses and institutions of all types and sizes. While manufacturers, contractors, chemical facilities and vendors servicing these enterprises may think these types of risk exposures are covered by their general liability policies, that belief is often misguided.
In fact, according to the International Risk Management Institute (IRMI)
, general liability insurance frequently excludes losses caused by pollutants and bacteria, including those stemming from “smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” General liability policies largely do not cover costs for clean-up, remediation and legal action. Umbrella and excess policies may also not be designed for specific environmental risks.
What does environmental liability insurance cover?
Environmental liability insurance (also known as pollution liability insurance) can help fill the gap…and it’s a gap many businesses and organizations need to address. Indeed, when you look closely at the breadth of operations involved with industrial products or processes, it’s difficult to think of one that would not need environmental insurance. From photo studios to petroleum refining facilities, municipal sewer districts to general contractors, it’s a very rare entity in any industry that doesn’t use some material with potentially adverse environmental impacts.
And environmental liability doesn’t end with materials used. Property owners may be held responsible for problems caused by prior tenants, such as mold buildup from poorly sealed doors and windows or inoperative bathroom ventilation fans. Construction firms could be held liable for renovation work that unintentionally releases hazardous substances (such as asbestos) they played no part in producing or installing. The construction industry also faces exposures related to movement of soil and debris
that could land in the lap of anyone from a civil engineer involved in the planning to a contractor working on site.
Our ever-escalating use of technology is also leading to added environmental exposures, and not just in the manufacturing sector where you might expect it. The demand for more and more servers working at full capacity around the clock to keep countless digital business streams running has created a need for more and more power generators to safeguard against power failures that could cripple operations. So, companies ranging from the world’s largest online retailers to mid-sized and smaller ventures often rely on generators that emit diesel exhaust – a significant air pollutant.
Additional examples of environmental liability
Even safety precautions made with the best intentions can result in exposures. Firefighting foams
still widely used in manufacturing and process facilities can contain PFAs (polyfluoroalkyl substances) linked to cancer and other health issues.
Whether it’s a global chemical manufacturing conglomerate, a mom-and-pop startup, or a city sewer district, no one is immune to the pitfalls of environmental hazards. But effective environmental insurance
, tailored to address changes in the variety and complexity of risks specific to your organization, can be the key tool in mitigating exposures…the ones you know about and the ones you need to know about.