Veracity Insurance Solutions has set aside November as Environmental Liability Education Month. Many businesses don’t really understand their pollution liability needs, nor do they understand what is covered with different kinds of pollution policies or endorsements. Our first article for the month explores these two important topics to give you some insight into the world of pollution liability and what it means for your business.
The Common CGL
If you were to look at your Commercial Liability Policy (commonly referred to as “CGL”), you would find the following pollution exclusion: “Pollution – ‘Bodily Injury’ or ‘Property Damage’ arising out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of ‘pollutants.’”
The purpose of the pollution exclusion is to state specifically that the carrier does not cover losses arising out of the discharge or escape of pollutants into the environment. The CGL policy is not unique to any specific industry. You could be a company disposing of hazardous wastes, in the business of manufacturing widgets, or a clothing retail store and there is a good chance your base CGL policy is going to have very similar coverages and exclusions.
Here are a couple examples of common Pollution Exclusions:
- CG2149 – Total Pollution Exclusion – It’s just that. There is no coverage for any alleged or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants”;
- CG2155 – Total Pollution Exclusion With A Hostile Hire Exception – This exclusion is similar to the CG2149, however this exclusion gives coverage back for losses that result in bodily injury or property damage arising out of heat, smoke, or fumes from a hostile fire. However, there is no coverage if that hostile fire occurred or originated at any premises used for the handling, storage, disposal, processing, or treatment of waste, or any location on which work is being performed directly or indirectly on any insured’s behalf performing operations to test for, monitor, clean up, remove, contain, treat, detoxify, neutralize or in any way respond to, or assess the effects of “pollutants”;
- CG2165 – Total Pollution Exclusion with a Building Heating, Cooling, and Dehumidifying Equipment Exception and A Hostile Fire Exception – Along with Hostile Fire that the CG2155 provides, this exclusion gives coverage back for bodily injury if sustained within a building which is or was at any time owned or occupied by, or rented or loaned to, any insured and caused by smoke, fumes, vapor, or soot produced by or originating from equipment that is used to heat, cool, or dehumidify the building or equipment that is used to heat water for personal use, by the building’s occupants, or their guests;
- Some special policies will have a Pollution Coverage section found within the policy, as long as none of the above endorsements are included. Within this section, coverage is given back for the following:
- Bodily injury sustained within a building and caused by smoke, fumes, vapor, or soot from equipment used to heat that building;
- Mobile Equipment: Accidental escape of fuels, lubricants, or other operating fluids needed to perform the normal electrical, hydraulic, or mechanical functions necessary for operation;
- Building Equipment: Coverage for bodily injury that results from smoke, fumes, vapor, or soot from a building’s heating equipment or water heater.
- Bodily injury for property damage arising out of heat, smoke, or fumes from a hostile fire; or
- Manufacturers of Pollutants: Product Liability coverage is still provided.
Types of Pollution Coverage
Veracity Insurance provides coverage for many different types of contractors and pollution liability needs.
Environmental Insurance policies are available to cover contractors, trucking and transportation companies, waste facilities/recyclers, industrial sites, environmental consultants, underground storage tanks, as well as others with a possible pollution exposure. Understanding the need of the business is key when deciding the type of coverage that is needed. If you are a mold remediation contractor, you obviously need coverage for mold included in your pollution policy, or if you transport goods and have a cleanup exposure in the event of a spill, make sure that “pollution in transit” coverage is included. Site Specific policies are designed as an easily accessible, affordable, and attractive solution for coverage for a broad array of site specific pollution liability risks. Contractors or Consultants Pollution Liability policies are geared more towards those that don’t have a specified location; this includes trucking and transportation risks.
- First-Party Coverage: Coverage for on-site cleanup of pre-existing and new pollution.
- Third-Party Coverage: Coverage for on-site and off-site clean up resulting from pollutants.
- Gradual Pollution Conditions: Coverage for losses that have taken place over time and notice is given to the insurance company as soon as practicable and during the policy period or Extended Reporting Period.
- Sudden Pollution Events: Provides coverage only for sudden and accidental pollution events that occur during the policy period and are detected and reported to the insurance company within strict time limitation periods.
- Clean-up Costs: Provides coverage for HAZMAT clean-up costs for which you become legally responsible.
- Fines and Penalties: Where allowable by law (not for criminal acts).
- Emergency Response Expense
- Punitive, exemplary or multiplied damages where allowed by law.
Veracity Insurance Solutions specializes in placing the right pollution liability for your business. With in-house underwriting authority and access to several key wholesale brokerage markets, Veracity stands out with its ability to customize insurance policies for all business sizes. In over 30 years of experience, we have never forgotten the importance of the human side of doing business in this fast-paced industry. Contact us today for more information or to get started on a quote.
Veracity Insurance Solutions Team