WHO NEEDS ENVIRONMENTAL LIABILITY?
The need for environmental insurance has increased in recent years. Governmental oversight has definitely increased. Going back to the Savings & Loan crisis of 1980’s the focus on this coverage became relevant when financial institutions were left “Holding the Bag” after pollution was discovered on many properties that had been repossessed. The EPA mandated massive cleanups of polluted properties. The owners often walked away from the cleanup responsibility for those properties. In many instances, the cleanup costs exceeded the residual values of the properties.
Subsequent to these events, financial institutions became more careful about requiring owners to carry environmental coverage. Local and state laws have become more rigorous. In some instances companies doing even minimal work in some states, may find themselves required to meet or exceed certain state environmental standards. After all, it was the state of California that first mandated the use of catalytic converters on automobiles.
In addition to Federal standards like the Clean Water Act, most states have departments of natural resources. Strict liability applies to the polluter of waterways, air and land. A recent case in Federal Court involves a suit by an environmental group against the owner of a closed power plant located on the Middle Fork of the Vermillion River. The suit alleges that the plant operator dumped coal ashes into unlined pits that are leaching into the river. The pits are also in a flood plain. The Middle Fork is the only designated National Scenic River in the state of Illinois. The Fork is home to the American bald eagle, river otters, rare endangered mussels and 20 threatened or endangered species.
Many property owners face obvious pollution exposures, such as factory pig farms and the air pollution alleged by their neighbors. Manufacturers that use toxic chemicals in their production process face significant pollution exposures. Other property owners may not be aware of hidden pollution that may pre-date their ownership of the property. Current survey requirements are more stringent than those of the past. Unknown pollution may exist beneath the buildings or in the surrounding soil. Floods in Texas resulted in significant environmental damage suffered by neighbors of chemical and petroleum producers. Coverage is available for both newly-created pollution occurrences and newly-discovered pre-existing pollution conditions.
Environmental coverage for property owners should be part of every agent’s risk review. In addition to the property itself, owners are vicariously liable for their personal property while it is being transported. Common carriers that haul items that may cause pollution are required to carry their own transportation pollution liability. Nevertheless, the original owners of those pollutants continue to be liable for any ensuing pollution. Coverage is available for contingent transportation and non-owned premises liability. Manufacturers sometimes ship product to customers who then store it on their own premises. Customers are not charged for the product until it is used. In the meantime, the manufacturer remains liable for any ensuing pollution from spills, leakage or other types of pollution.
Contractors transporting fuel to construction sites, have the potential to experience a spill on non-owned property or during the transport of fuel to a construction site. Contractors who are engaged in road work use chemicals in the sealing process that may cause dangerous runoff affecting water tables. Contractors working with rehab properties may expose lead paint or asbestos. These pollutants are often found in pre-1978 buildings.
Let us assist you in your review of potential uninsured pollution exposures. Debbie Klisch Debbie [at] scicteam [dot] com 719-329-4441