If you release contaminants at your business premises or work sites that affect the environment, will your insurance respond?
How can this happen? It depends on what your business is, but all of us use or generate potential pollutants. Any of the following could cause pollution:
- Sewerage and waste water if pipes and septic systems are not properly maintained.
- Cleaning products and over the counter insect/pest killers and fertilizers if improperly stored, used or disposed of.
- Ordinary rubbish, old cars, appliances and broken electronic goods if not disposed of properly.
- Heating systems, whether fueled by fossil fuels or wood.
Some businesses use or generate more specific potential contaminants. A partial list follows. Is yours here?
- Farms, golf courses, exterminators, arborists and lawn care providers applying pesticides, herbicides and/or fertilizers. Farms that plow or burn fields or produce manure.
- Construction operations debris or debris from unpaved roads during construction.
- Waste incinerators, many manufacturing industries, power plants and petroleum refineries emitting high levels of contaminants and/or ashes that remain after solid fuels are burned.
- Landfills and sewerage treatment facilities from buried rubbish, sewerage flowing through leaking pipes and wastes that remain after sewerage is treated.
Many industries work with chemicals or solvents that can contaminate land or water via leaking pipes or tanks. Auto/truck/equipment repair facilities generate petroleum waste that must be properly disposed of. Many liquids (petroleum products, chemicals, etc.) are stored in either above or below ground tanks attached to pipes for distribution which must be properly maintained to prevent leaks. Paints, chemicals, metals, plastics and other by-products of the manufacturing process of various products can become land and water pollutants if not disposed of properly.
If your business is involved in a pollution incident, how costly is it? It depends on what the substance is, how much there is, where it is and what the permanent damages may be. If an arborist spills a small amount of pesticide on a customer’s paved driveway, it can typically be contained and absorbed for disposal quickly with little cost involved. Waste water that slowly leaks from a poorly maintained septic system, leaching into neighboring land and water wells and sickening the people who use those wells could cost hundreds of thousands of dollars. Other pollution incidents have cost millions (billions in many well publicized events) of dollars to remedy. Businesses have gone bankrupt because they were responsible for pollution and did not have adequate insurance to pay the bills.
Will your insurance policy pay to clean up pollutants on your premises? In most states, standard property insurance policies will pay a specific amount for clean-up of pollutants on your business premises as long as the pollution is the result of an incident such as fire, windstorm, explosion, etc. In addition, most insurers offer endorsements that increase that amount.
How will your policy respond to pollution incidents away from your premises? Except in a few states, most standard liability policies provide very limited coverage for pollution incidents at or away from your premises when there is injury or damage to others. Coverage can be added by endorsement for some, but not all, kinds of pollution incidents. There are also specific Pollution Liability policies available that can provide coverage standard liability policies do not.
What should you do?
Think about what the potential is for your business to cause pollution incidents. Determine what coverage you have and what your options are if you believe there is the potential for a pollution incident at your premises or from your operations and your policy may not protect you. Your independent insurance agent can help with this. He or she can analyze your coverage and give you the costs to endorse your policy or purchase a separate pollution policy as needed.
Acadia Insurance is pleased to share this material with its customers. Please note, however, that nothing in this document should be construed as legal advice or the provision of professional consulting services. This material is for general informational purposes only, and while reasonable care has been utilized in compiling this information, no warranty or representation is made as to accuracy or completeness. Distribution of this information does not constitute an assumption by us of your obligations to provide a safe workplace. Maintaining a safe workplace in accordance with all laws is your responsibility. We make no representation or warranty that our activities or recommendations will place you in compliance with law, relieve you of potential liability or ensure your premises or operations are safe. We exercise no control over your premises or operations and have no responsibility or authority to implement loss prevention practices or procedures.