Insurance Matters: Do you need insurance for pollution?

Insurance Matters: Do you need insurance for pollution?

Source: http://napavalleyregister.com, August 23, 2017
By: Bruce Sackrison

Most business insurance policies exclude pollution — and most business owners don’t know this.

For this last article in a series, I could have called “weird liability coverage” we’ll look at a liability risk and coverage that is seldom talked about.

Even if you don’t own an oil tanker or coal burning power plant… you may still need this coverage.

What is it?

Environmental Impairment Liability (EIL) insurance is a specialized policy that didn’t exist before 1978.

But the growing number of environmental disaster lawsuits and insurance claims in the 1970s forced insurance companies to tighten up the pollution exclusions that already existed in most commercial liability policies.

Standard insurance policies were never designed to cover pollution.

EIL insurance is designed to help fill the “pollution-exclusion” gap.

Policies vary widely, and unfortunately there is not much in the way of standardization.

But generally, EIL policies are designed to cover the cost of cleanup when your business accidentally pollutes the environment. They often (but not always) can also help with legal and other expenses.

Who needs it?

Many businesses need EIL coverage, and don’t have it.

Among the most uninsured types of businesses are contractors, building owners and apartment owners.

While business owners are rightly concerned about all the “big things” they can see, they often forget that a single leaky pipe hidden away in the dark can spawn a tiny mold spore. And that tiny spore can grow into a business-killing pollution claim.

Every business owner should ask themselves… do I need pollution coverage?

What does it cover?

There are two broad categories in EIL coverage:

Premises Insurance: Pollution and mold that harm others often start at a business location. And that business property owner can be held liable for it. Apartment complexes, warehouses, and any business building can become a threat to the environment. They key thing to remember is that most EIL policies are designed to cover harm to others caused by pollution on their property. Most policies do not cover damage to the owner’s property itself. It’s a liability policy, not a property loss policy.

Contractors Insurance: Many contractors are at risk of accidentally causing pollution damage. Spills, airborne contaminates, and mold growth are just a few of the ways a contractor can accidentally leave a place worse than when they arrived. And most general liability policies exclude these pollution risks.

My advice:

Environmental Impairment Liability insurance is ignored by many business owners. If that’s you, maybe now is the time to stop ignoring it.

It can be confusing. It is not simple or standardized.

Coverage must be carefully tailored for your unique situation, and that takes time. But there are agents who will take the time to help you with this.

Contact an experienced local agent who specializes in business insurance.

Ask them to help you begin exploring your risks and crafting coverage that can help cover those risks.

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