Is Your Insurance Protecting You from Pollution Risks?

Construction sites and other industrial facilities offer many challenges and dangers to those working on-site and to the surrounding communities. In order to protect themselves from accidents and other events that may lead to pollution problems, companies must consider whether their insurance policies will adequately cover them in case of pollution events such as chemical spills, fires and storage tank ruptures.

But construction and manufacturing companies are not the only businesses who must consider whether their insurance needs include specific policies for pollution control and cleanup. Small contractors and even sole proprietors in a variety of industries should also be aware of the risks of pollution in the operations of their businesses.

Basics of Construction Liability Insurance

In order to even be eligible to bid on certain construction projects – especially government contracts – construction companies will be required to provide proof of builder’s liability insurance coverage to protect against injuries and accidents on the job, not only to cover individuals who may get hurt, but to cover property damages as well. Both the primary contractors and all subcontractors will likely need to show adequate coverage in order to qualify for the project.

But even the most comprehensive builder’s liability insurance policies will not likely cover incidences of air, water or ground pollution such as sewage and wastewater leakage, pesticide pollution or chemical solvent spills. Because of this, additional insurance policies to cover pollution risks may also be required by contractors and subcontractors.

To protect your company in the event of environmental damages, specialty risk insurance policies must also be purchased. Specifically, one or more types of pollution insurance coverage will be necessary.

What Is Pollution Insurance?

Pollution liability insurance is a type of specialty risk insurance tailored to meet the specific needs of different businesses in various industries. Insurance companies are constantly creating custom pollution coverage policies to meet the needs of their clients. The common denominator, of course, is that pollution insurance exists to protect property owners, construction companies and various other contractors and entities in cases of environmental pollution and the problems it can cause to persons, to properties and to the environment. Property owners will need to maintain insurance to protect their land, structures and other fixed facilities, while contracting companies will need contractor’s pollution insurance to protect against damages and injuries that may occur during operations.

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Who Needs Pollution Insurance?

Pollution insurance is a rapidly expanding branch of insurance that touches on a host of industries and provides pollution coverage for both large, multi-national corporations and small micro-businesses. Since many general liability insurance policies and builder’s umbrella policies specifically exclude coverage for pollution damages and related consequences, it is imperative to make sure that any pollution risks are adequately addressed by your insurance policy.

Contractor’s pollution insurance may be needed for large and small businesses within a variety of industries:

  • Farmers
  • Landscapers
  • Painters
  • Pool cleaners
  • Auto mechanics
  • Home builders
  • Rental property managers
  • Commercial real estate developers
  • Demolitions contractors
  • Roadway construction companies
  • Electrical, plumbing, HVAC and pipeline contractors
  • Airport fuel operations companies
  • Crane operators (including marine and inland marine)

Property owners and facility managers will also need fixed facility environmental liability insurance to protect against property damages, injuries on-site and land- and waterway pollution.

Even environmental cleanup companies – whose primary business it is to clean up after other companies whose operations involved land and groundwater contamination – must themselves have extensive pollution liability insurance coverage to protect their businesses from damages in cases where their cleanup operations of polluted sites uncover additional pollution problems.

Contractor’s Pollution Liability Insurance Vs Fixed Facility Environmental Liability Insurance

Contractor’s pollution liability insurance provides compensation to third parties in cases of bodily injury and property damage that occur during operation. Because of the incredible diversity of events that may occur from one industry to another, it is important to consult an insurance specialist in order to tailor a policy that will cover all your needs. Many policies will need to have additional coverages added on to cover liabilities specific to your industry.

What Does Pollution Insurance Cover?

Different policies may offer different areas of pollution coverage, so be sure to consult your insurance agent to discuss your company’s needs for both general operations and for specific projects. The following are examples of things that might be covered:

  • Injuries and accidents that occur during operations
  • Environmental assessment consultations
  • Property damage
  • Site cleanup
  • Lawsuit settlements
  • Legal fees

If your company’s day-to-day operations involve the possibility of causing pollution and spreading of contaminants into the air, land and waterways, then it is crucial that your insurance policies provide adequate coverage for all potential pollution scenarios. Pollution cleanup can be a lengthy and expensive process, one which many companies have not been able to survive due to inadequate insurance coverage.

Protect your company’s future and schedule a consultation with a construction industry insurance specialist from Allied Insurance Brokers.  At Allied, our 15-year focus in the construction insurance industry makes it easy for us to speak your language and know exactly what you need. If you want to lower your risk and your insurance cost, get in touch with Allied Insurance Brokers today.

 

*Allied does not deem this blog entry as a complete and thorough listing or overview of the above topic, and does not recommend it be primarily relied on. It only highlights some common issues and resolutions. For a thorough overview, please contact Allied’s Risk Engineering Division.