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Insurer Practices Can Vary Widely for Environmental Policies

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When agents shop around for environmental insurance for their clients it’s important that they ask their wholesale broker or underwriter the right questions to cover all of their client’s exposures.

Most insurance companies do not provide a full range of environmental coverages. Instead, they limit their underwriting procedures to certain types of policies, including environmental professional E&O liability policies, contractor’s policies, site specific policies, remediation stop-loss policies, environmental remediation policies, asbestos and lead abatement contractor’s general liability policies and/or combination CGL/EIRS policies.

These policies are procured in order to protect insureds against losses occurring on either first-party (property) or third-party (liability) policies. These policies manage pollution-related loss exposures for tort, contractual and/or statutory violations. In all likelihood, liability triggering potential coverage under these policies relates to the release of pollutants, remediation of the release of pollutants and/or statutory violations.

When securing coverage for a given environmental situation, a wise agent should be sure to review the underwriting practices of each respective insurer. Even though it may appear by way of a quotation and/or declaration sheet that two insurers are providing the same coverage, one policy may include an endorsement precluding coverage for a particular occurrence, whereas another may not.

For example, one policy may provide coverage for contamination caused by an insureds whereas another policy may only provide for coverage for contamination which occurs on property owned by a third-party. In order to eliminate the potential for an E&O claim against an agent, the agent should fully understand the risk for which the insured is seeking coverage. The agent should also ensure that quotations are solicited from companies intending to cover that risk. This would include knowing the quality and quantity of materials being utilized by a given insured and the locations in question, as well as how and where the pollution could potentially occur (i.e., water, air, or ground infiltration) as well as the potential for damage to the surrounding populations/property.

By doing this research, the agent will be certain that the insured is obtaining the coverage which it needs for a given operation, and will also greatly minimize its own exposure of an E&O claim.

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