When it comes to determining which businesses need pollution coverage, most businesses think they know the answer. The manufacturing plant with its tall smoke stacks, the local gas station or the rock quarry down the road. In short: anyone but me.
What constitutes a pollution claim?
The misconception around pollution exposure and the need for coverage is based on the fact that most businesses believe that pollution claims arise from traditional environmental claims like oil spills or water contamination. The reality is that pollution claims can come in many unexpected ways. For example, a faulty HVAC unit in a commercial building that starts to release carbon monoxide fumes that can lead to injury to the tenants. Another example is a contractor excavating for the foundation of a building that hits a sewer pipe. Each of these situations arises from the normal operations of the business, but each results in a pollution claim.
Finding pollution coverage
Most businesses, such as the contractor or landlord in the previous examples, assume that the Commercial General Liability policy they purchased will provide the protection needed in the event of a pollution claim; however, the modern Commercial General Liability policy is most often not the answer to these claims. Over the years, the insurance industry has eroded the pollution coverage found in the Commercial General Liability policy by introducing total and absolute pollution exclusions found on many policies. In addition, case law across the country has generally found in favor of insurers that the pollution exclusion has broad application beyond traditional pollution claims. When taken together, these two factors have made the purchase of a standalone Pollution Policy important for most businesses.
Given the current environment surrounding pollution coverage in the Commercial General Liability policy, it is important for a business to evaluate the need for a standalone Pollution Policy. Coverage is available for liability claims and cleanup costs. If you have questions about pollution coverage and your potential exposures, a Scott Risk Advisor can help you evaluate the risks to your business and suggest coverage that is appropriate.