General liability insurance is the standard type of insurance that most businesses purchase. It covers a wide range of incidents, accident, injuries and events that can result in damage to the property, equipment, inventory, employees and functions of a business. General liability insurance does not provide much coverage for environmental damage, including pollution damage from toxic spills. If your business handles toxic materials, or stores them in any way, it is worthwhile to secure an environmental liability insurance policy to cover any exposure of this kind.
A Brief History of Environmental Coverage
Insurance markets first began to offer environmental coverage in the 1980s, no doubt as a response to the rising interest in ecology and the “green” movement. With government regulations still fairly new, and many reinsurers reluctant to recognize these emerging claims, the insurance companies were only able to provide limited coverage. By the 1990s, however, there were favorable signs that the environmental insurance markets were finally making some positive headway. Since most environmental claims are of a catastrophic nature, they are also infrequent. This led many insurers to take a chance, realizing that the reward was actually greater than the risk. There was also more loss data available, so insurers and reinsurers were able to see more clearly what the financial risks were. Today, the variety of coverage types and amounts has grown significantly.
Five Facts About Environmental Liability Insurance
The primary type of environmental liability insurance is classified as general. General environmental liability insurance covers any clean-up requirements as stipulated by the state government, as well as any bodily injury, property damage, and third-party claims. It also provides coverage for any legal expenses related to pollution or contamination events.
There are many types of environmental liability insurance that cater to specific types of events or situations. Errors and omissions policies provide coverage to any consultants who advise on environmental conditions to a third party. Contractor policies cover any operations performed by a remediation contractor. Firms that handle and analyze hazardous materials can obtain testing laboratory coverage. There are also policies that protect home lenders and real estate agents in the event that one of their properties is found to be contaminated.
Most general liability policies exclude pollution losses, making environmental policies a necessity for many businesses. The only types of pollution covered by a general liability insurance policy are smoke damage from a serious fire, or fumes from a faulty heating or cooling system. Asbestos is one of the more significant pollution problems that companies have to deal with. In most cases it a matter of handling the disposal of asbestos materials from an old site, or installing materials that could contain asbestos in a safe manner. Asbestos abatement liability insurance is of the former type, designed to provide coverage for any property damage or bodily injury that results from abatement operations. Asbestos containment coverage insures business owners in the event that a release of asbestos occurs in some manner.
Some environmental policies were created to provide coverage in response to new federal government regulations. Pollution cleanup indemnity must be part of the insurance coverage for ships and other vessels that may potentially carry oil or other toxic substances. The EPA also requires the owners and operators of storage tanks where toxic chemicals are kept to have underground storage tank liability coverage. So that in the event of a spill, they can cover the cost of cleaning up the mess and repairing any resulting damage.
The emergence of environmental liability business insurance has been one of the most important changes in commercial insurance. Over the past 40 years, businesses have become more sensitive to their responsibilities to the environment and to the community around them. Thus, the demand for policies that help them recover from a disaster in a “green” way has increased the demand for expanded environmental liability policies and resulted in a wealth of protections to choose from.
Poms & Associates offers a wide range of business insurance and brokerage services, including environmental liability insurance. For more information about how we can help you find the right environmental liability business insurance policy for you, please visit our website or contact us.