Environmental Liability Insurance
Environmental Liability Insurance Application
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Coverage For Businesses Across The United States
Standard Business General Liability (GL) policies provide little coverage for pollution damage, including toxic spills. Today, most companies that store or handle potentially toxic materials purchase a separate environmental liability policy. These policies cover the exposure that the GL policy excludes.
Generally, coverage includes statutory clean-up requirements and bodily injury and property damage third-party claims and legal expenses resulting from pollution or contamination incidents. The coverage kicks in both for incidents that are “sudden and accidental” and “gradual.” Coverage also exists for business interruption losses.
Property owners can also purchase environmental impairment liability insurance. It covers property loss and liability arising from pollution-related damages for sites that have been inspected and found uncontaminated.
Several other types of environmental liability insurance exist:
- Environmental consultants’ errors and omissions policies cover consultants who advise third parties about environmental conditions.
- Environmental contractor policies cover operations that a remediation contractor performs.
- Environmental testing laboratory coverage addresses the liability of firms that analyze hazardous materials in the soil, ground or air.
In addition, there are policies that protect lenders and real estate agents if they handle properties that later turn out to be contaminated.
If you’re looking to protect your business from claims relating to environmental liability or damage, All Pro Coverage has you covered. We work with a variety of top insurance carriers to provide businesses across the United States with reliable environmental liability insurance. If you’re an environmental consultant, you face even more danger related to professional liability claims. Call us at (888) 858-1777 or fill out a free online quote form to start insuring your practice.
History Of Pollution Coverage
In the 1960s and 1970s, America’s growing concern for the environment led to passage of a number of federal and state laws regarding liability for environmental cleanups. The best known is the Comprehensive Environmental Response Compensation and Liability Act of 1980—the “Superfund” act, named after the trust fund it set up to pay for cleaning some of the nation’s most polluted sites. Many of these laws imposed liability for cleanup on polluters. Polluters sought protection under their general liability policies.
Insurers wanted pollution to be excluded. The standard policy’s original pollution exclusion, dating to 1973, was intended to make clear that the general liability policy was not intended to cover pollution that the insured party intended or expected to produce—like a factory spewing air pollutants up a smokestack. It also tried to clarify that the only pollution covered was “sudden and accidental.”
Over time, court decisions frequently interpreted the word “sudden” to mean unanticipated or unforeseen, exposing the insurance industry to losses it never intended to cover. Insurers tightened their policy wording, excluding almost all pollution losses in 1986, then adjusted wording gradually for the next decade.
Today the standard general liability policy excludes most pollution losses. The main exceptions are from smoke from an out-of-control fire or fumes from a faulty heating or air-conditioning system. In its place stands environmental liability coverage.
Common Environmental Consultants Liability Insurance Questions
What is Environmental Liability Insurance?
Environmental liability coverage protects businesses against claims relating to bodily injury or property damage caused by pollution or contamination. For environmental consultants, this relates to professional liability insurance.
What Does Environmental Liability Insurance Cover?
Say you are consulting with a company who wants to build a complex across a river from the main city. You see nothing wrong and the construction breaks ground. The construction ends up polluting the water, leading to people in the city growing sick. Now, you are liable because you did not anticipate the incident. This is where you would need professional liability insurance.
This insurance can help cover medical costs and legal fees if the victims decide to sue for damages.
What Does Environmental Liability Mean in Insurance?
Environmental liability means the liability a business holds for any pollution their business causes.
What Are Some Eligible Risks?
Eligible risks include (but not limited to):
- Oil, gas and other petro chemicals
- Condos, townhomes, single family residential
- Swimming pools
- Nuclear facilities
- Amusement rides
- High rise
- Harbors, ports, piers
- Offshore structures and vessels
- Large dams, long-span bridges or tunnels
- Stadiums, arenas, sports venues
- Product / equipment designer
- Glazing, building envelope, curtainwall design
- Geotechnical / soils engineering
- Fire suppression
- Asbestos, Lead and Mold Abatement
- Ground Water, Soil and Bio Remediation
- Emergency/Spill Response
- Landfill Construction
- Liquid Waste Management and Treatment
- Fire, Water & Wetland Damage Restoration
- Crime Scene Cleanup
- Radon Mitigation
- Waste Water Facility Operators
- Underground Storage Tanks
- Debris Removal
- Erosion Control
- Analytical Laboratories
- Environmental Feasibility Studies
- Hazardous Material Consulting
- Mold Air Monitoring & Inspections
Can You Provide A Claim Example?
A general contractor subcontracts design of HVAC to a mechanical engineer. The engineer makes a mistake in his calculations, which results in inadequate cooling of an office building in summer months. The building owner demands a $75,000 upgrade from the general contractor. The engineer has gone out of business and he no longer carries Professional Liability insurance. The general contractor is held liable for the design error and his GL policy will not cover it.
A contractor estimates the cost of a new package distribution center to be $1MM. When the project is 90% completed, the owner discovers that the project does not meet specifications. Areas of the floor where heavy equipment is to be placed are not properly reinforced, and retrofitting is required. The new cost of the project is $2MM and the contractor is held liable for the difference due to mis-design of the floor slab.