Pollution insurance covers any type of small-scale pollution that causes soil, groundwater or property to become contaminated, as well as air-borne contaminates like emissions and smoke. If your business, no matter what size, uses environmentally unsafe chemicals, (i.g. a hair salon, dry-cleaning service, junkyard, manufacturer) you run the risk of a pollution lawsuit.
Pollution Liabilty Insurance Coverages
Your General Liability policy (link) will most likely not cover pollution for which your business may be held liable. Pollution insurance refers to pollution that contaminates property or causes harmful effects to people. Pollution Insurance could cover the emission of pollutants brought to the work site or the release of pre-existing pollutants at the work site, amongst many others. The pollution could be a sudden spill or something that happens over time.
For larger, more extensive pollution incidents, an environmental impact liability insurance policy may be needed.
Even contractors who construct buildings have a need for pollution insurance if the work they do can affect long-term air or environmental quality. A specialized form of pollution insurance called contractors pollution liability insurance can meet the needs of the construction industry.
What Does Pollution Insurance Cover?
Most of the coverage options listed here are standard with a pollution insurance policy but you may need to purchase additional endorsements to get full coverage.
Types of coverage:
- Legal defense fees: The insurance company will provide you with attorneys to defend you in a pollution-related lawsuit. Your policy can also cover related legal fees and court costs.
- Clean-up efforts: If your company is obligated to clean up the contaminants, this coverage will help reimburse you for a portion of the costs. Some insurance companies will allow you to purchase stop-loss policies. These policies limit the amount that you will be responsible for during the clean-up. This can be helpful if, in the clean-up process, you find additional pollutants and the clean-up cost goes up.
- Operations: If you use chemicals and hazardous materials in your daily business operations, you want to make sure you have coverage for accidents or slipups that may cause pollution. There are two types of coverage for this:
- Catastrophic coverage covers you if there is a sudden event such as a fire or explosion that causes contamination.
- Non-catastrophic coverage covers you if pollution occurs over the course of time and affects any businesses or residential areas nearby.
- Property transfer: If you purchase a plot of land or a building that has been contaminated by a previous owner, this coverage will cover the necessary clean-up costs.
- Errors and omissions: This is specifically for clean-up companies and environmental consultants. It helps cover you if you wrongly declared a property to be pollutant-free or if the work you did caused even more pollution.
What Is Contractors Pollution Liability Insurance?
As a contractors, you work on other people’s property. If the work you do uses substances or materials that are later found to be hazardous, you can be liable for any damages and clean-up. Contractors pollution liability insurance provides contractors with coverage against claims of bodily harm or injuries and provides coverage for any related court costs and legal fees.