Every business runs the risk of an environmental loss, yet many business owners are unaware of the potential threat. To learn more about Environmental Insurance, we spoke with Gina Jones, Vice President, Director, Environmental Programs, Burns & Wilcox, Denver, Colorado.
What are some of the greatest environmental risks faced by companies today?
G.J.: Environmental risk is so broad and encompasses many different types of risks. The common issues at hand include mold, asbestos, radon, and PCBs. PFAS, or “forever chemicals,” is an issue getting a ton of attention right now. There are over 5,000 substances that have become notorious for their potential danger to human health. Another environmental risk, truthfully, is the unknown. Every company has some sort of environmental risk, but they often do not realize it. Business owners are often under the misguided belief that if they do not handle something hazardous, they do not have an exposure. In reality, all companies have an environmental exposure. Anything in excess and outside of its natural environment can be a pollutant.
What should companies be aware of relative to these risks?
G.J.: All businesses must manage the risks their company may pose to human health and the environment. It is their job to assess the risk and eliminate or reduce the risk. Failure to do that could be extremely costly to the client — in cleanup costs, legal fees, and even criminal charges.
Which insurance policies can help them respond to these threats, and what are the limits and examples of covered expenses?
G.J.: The type of Environmental Insurance a company needs really depends on their services. A Pollution Legal Liability (PLL) Insurance policy is for fixed sites and generally covers costs related to bodily injury, property damage, and cleanup costs for a pollution release onsite and for pollution that migrates off your site. Contractors Pollution Liability (CPL) Insurance covers costs stemming from third-party liabilities at a job site. As an example, if a plumber were to cause or fail to repair a slow drip from a pipe or faucet and that leads to mold growth, a provision in the policy could cover the cleanup cost from that and any injuries or property damage — provided the policy does not exclude mold, which some do. Then there is Storage Tank Liability Insurance, which provides for underground and above-ground storage tanks, and Transportation Pollution Liability (TPL) Insurance for when you are transporting something, and it spills and causes a pollution condition. Products Pollution Liability Insurance is also important. A lot of these policies can be combined together and written as one. Our policies provide for defense, including legal fees, which is often one of the greatest exposures, especially with PLL Insurance.
Mold has been resulting in some of the largest claims in recent years. It keeps escalating. Mold can be covered under PLL Insurance for fixed sites, or under CPL Insurance if the contractor causes a mold release.
What are some examples of the types of businesses that need Environmental Insurance?
G.J.: Any business has some sort of exposure — from dry cleaners and gas stations to building owners and small contractors. Many of them do not realize they have an exposure, which is the biggest problem we have. Each year 90% of environmental losses are not covered, and that is because they do not carry Environmental Insurance because they do not think they have an exposure, but they do.
Can you give me an example of a scenario you have dealt with that would be illustrative of the types of risks that we have been discussing?
G.J.: There was a business that cleaned restaurant grease traps and while the client’s vehicle was on the road, the back opened up and the canisters fell out. The spill was cleaned up very quickly and they knew what they needed to do to make sure it did not cause any further damage or enter a waterway, but there was a woman crossing the street who slipped on the grease and fell, and she sustained some substantial injuries from the fall. That would fall right under the TPL Insurance. Another example came from a clogged drain in a general office building, where a staff member used chemicals to unclog the drain, and it sent noxious fumes through the HVAC system. Some employees even thought it was anthrax. The PLL Insurance policy covered not only the cleanup, but also business interruption for the other companies in the building that had to shut down for the day. The policy goes far beyond just a pollution cleanup.
What are the greatest opportunities for brokers within Environmental Insurance?
G.J.: Every retail broker should be talking to each of their clients about what their risk is and make sure they are aware of their exposures and that they would not be covered for environmental losses under their Commercial General Liability (CGL) Insurance. This is a great opportunity to showcase their value as an advisor to clients. It is really about educating clients and making sure they understand the risk.
What advice would you give brokers to increase their success rates with these products?
G.J.: The best way to increase their success rates with Environmental Insurance is to bring claims examples and talk about those. We have that at our fingertips, and that is the best way to showcase what the exposures are. Oftentimes, clients cannot visualize the risk without those examples.
Why should someone consider Burns & Wilcox for their Environmental Insurance needs?
G.J.: We have access to every Environmental Insurance market. We also have individuals on our team who are experts in the environmental industry. We know which market is best for each of our clients, and we are uniquely positioned to provide each client with the best combination of product, coverage and carrier.
ENVIRONMENTAL INSURANCE
WHY YOUR CLIENTS MIGHT NEED IT: Nearly every business carries some level of environmental risk, even if they do not realize it. Potential pollution incidents can lead to significant liability costs for property damage, bodily injury, cleanup, and legal defense, which standard business insurance often does not cover.
PROTECTS AGAINST: Losses related to unexpected releases of pollutants, including bodily injury, property damage, cleanup costs, and legal defense costs.
EXPERT OPINION: “Mold has been resulting in some of the largest claims in recent years. It keeps escalating. Mold can be covered under PLL Insurance for fixed sites, or under CPL Insurance if the contractor causes a mold release.”
