Environmental losses, site pollution risks and Environmental Insurance solutions were among the topics addressed in a webinar hosted by Burns & Wilcox.
Environmental losses that are not covered by insurance are thought to amount to about $1 billion per year. This is largely because many business owners do not believe they have an environmental exposure; those in sectors that do not involve working with hazardous chemicals or who have not yet experienced a loss often assume Environmental Insurance is unnecessary.
“Absence of loss does not mean absence of risk,” said Gina Jones, Vice President, Director, Environmental Programs, Burns & Wilcox, Denver, Colorado. To brokers whose clients assume they do not need Environmental Insurance and then suffer an environmental loss, she said: “Imagine your client’s frustration when they realize their Commercial General Liability (CGL) Insurance policy is not going to step in and cover those types of claims.”
From contractors to transportation companies, almost any type of business could be involved in a pollution event — and there is no shortage of cautionary tales to illustrate this reality, said Karim Jaroudi, Product Specialist, Environmental, Burns & Wilcox, Toronto, Ontario. “We are seeing frequency and severity trending at this point,” he said of losses, noting that both he and Jones have worked with six- and seven-figure claims.
Examples of environmental events include a landfill facility sued by neighbors over alleged odor concerns, a painting contractor named in a bodily injury lawsuit because it allegedly failed to provide adequate ventilation on the job, and a utility provider named in a liability suit after its subcontractor allegedly damaged a sewage line during power line construction. Examples of claims that might arise from non-environmentally focused operations include mold discovery in an office or residential tower or a paving contractor accidentally breaching a sewer line.
Even seemingly harmless materials can create environmental perils, such as a trucking accident that led to a milk spill in a stream that allegedly lead to widespread fish deaths.
“Milk or something else that seems innocuous can be catastrophic in nature,” Jones explained. Anything in excess or outside its natural environment can be a pollutant.
Jaroudi agreed: “Anything that enters the environment in a significant quantity that does not belong there requires remediation,” he said.
Environmental Insurance policies, which are customizable, include Site Pollution Insurance, Contractors Pollution Liability (CPL) Insurance, Commercial General Liability (CGL) with Contractors Pollution Liability and Professional Liability package policies, Products Pollution, Transportation Pollution Liability Insurance, Storage Tank Liability Insurance and Umbrella and Excess Insurance.
In both the U.S. and Canada, a common type of Environmental Insurance is Site Specific Premises Pollution Liability Insurance. This policy can include coverage for first- and third-party cleanup costs, third-party liability, natural resources damages, business interruption and defense costs, with terms up to 10 years, among other features. It can also include coverage for non-owned disposal sites, offering protection for physician’s offices and other places that dispose of sensitive material. Another key feature is the ability to offer “pre-existing conditions” coverage, meaning claims made coverage with no retroactive date.
“When you are the generator of waste, you are responsible for the waste from cradle to grave,” Jones emphasized. “If the [company] that picks up your waste disposes of it incorrectly, you are going to be named in the suit. [Site Specific Premises Pollution Liability Insurance including Non Owned Disposal Sites] is very important coverage to have.”
Package policies are a popular option with Environmental Insurance, filling potential gaps between separate policies and eliminating duplicate minimum premiums. These include General Liability coverage packaged with either Contractors or Premises Pollution Liability. Professional Liability Insurance may also be included with these package policies. “This is one of the number one things we do,” Jones said.
As the cannabis industry grows, particularly in Canada, Environmental Insurance is an essential consideration due to risks such as fire or odor and air emissions. Another important program specifically covers residential and commercial tanks, Jones said. This coverage is designed to meet federal financial responsibility requirements and can help mitigate cleanup costs as well as costs related to third-party bodily injury and property damage.
The coronavirus pandemic has created an emerging demand from disinfection contractors for Environmental Insurance, Jones said. Specialized restoration contractors with an industrial hygienist on-site could benefit from this coverage. “If you have expertise and knowledge in cleanup and disinfection, then we also have carriers that will, in fact, cover the disinfection of COVID-19,” Jones said.
It is always a good time to review environmental risks and the available Environmental Insurance options with an expert. “We see ourselves as experts and solution providers,” said Jaroudi, who participated in a Q&A session during the webinar, along with Jones. “We [are] the specialists so you do not have to be.”
Watch the full webinar for more information.