Helena Joyce
Pollution liability claims can arise from a wide range of activities, and they are not limited to just chemicals and pathogens. For example, noise can be a pollutant, and heavy machinery can cause soil or water pollution if fuel leaks go unnoticed. Contractors may also be susceptible to claims if they do not properly manage dust or asbestos, which can cause respiratory issues for people nearby. To protect against these risks, businesses can purchase pollution legal liability insurance (PLL), which covers environmental liabilities such as pollution event cleanup costs, bodily injury, property damage, and legal expenses. PLL is a specialty liability insurance policy that provides additional coverage for environmental claims at fixed sites not typically covered by a general liability (GL) policy.
| Characteristics | Values |
|---|---|
| Type of pollution | Chemical, noise, asbestos, dust, mould, legionella, etc. |
| Type of claim | Third-party bodily injury, property damage, business interruption, legal expenses, emergency expenses, etc. |
| Type of insurance | Contractors pollution liability (CPL), pollution legal liability (PLL) |
| Type of coverage | On-site cleanup, off-site cleanup, emergency response costs, regulatory fines, hospital bills, lost income, etc. |
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$9.95 $19.95
$488.52 $550
What You'll Learn
Pollution liability insurance
This type of insurance is particularly relevant for businesses and contractors working in construction, manufacturing, landscaping, and other fields where there is a risk of pollution liability. For example, construction and landscaping contractors may be vulnerable to pollution liability claims if heavy machinery springs a fuel leak, leading to soil or water pollution. Similarly, the use of herbicides, pesticides, and fertilizers in landscaping can result in pollution if accidentally spilled in large quantities.
Additionally, pollution liability insurance can help businesses with the financial losses that may occur after operations are shut down due to a pollution event. This is often referred to as business interruption coverage, which is an important aspect of pollution liability insurance policies.
By having pollution liability insurance, businesses and individuals can mitigate the risks associated with pollution incidents and ensure they have the necessary financial resources to address any environmental claims or liabilities that may arise.
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Environmental risk exposure
Contractors may engage in activities that release pollutants, such as excavation, laying pipelines, restoring property, or waste disposal. Large machinery used in construction, such as bulldozers, can carry up to 79 gallons of diesel fuel, which can leak and contribute to soil or water pollution if not addressed promptly. Additionally, the regular use of herbicides, pesticides, and fertilizers in landscaping work should not cause harm when used appropriately. However, accidental spills or improper handling of these chemicals can result in pollution incidents that require emergency responses.
Commercial property, property under development, and other landowners' properties may also be sources of ground or air pollution. Environmental insurance policies are designed to protect against these risks, covering losses, personal injuries, and damages resulting from pollutants. This type of insurance is especially important because general liability policies often exclude pollution-related events, leaving businesses vulnerable to unexpected expenses and legal issues.
Specialized pollution legal liability insurance (PLL) is one way to address environmental risk exposure. PLL provides coverage for environmental liabilities, including cleanup costs, bodily injury, property damage, and legal expenses. It applies to fixed sites and covers both on-site and off-site cleanup expenses. PLL also covers indoor contaminants like mould and asbestos, which are common issues in older buildings undergoing renovation or demolition.
Another type of insurance, Contractors Pollution Liability (CPL), is designed specifically to protect contractors who may release pollutants during their work. This includes surface water contamination, chemical spills, inappropriate disposal of hazardous materials, and exposure to asbestos or mould. Both CPL and PLL provide first- and third-party liability coverage, ensuring protection for the policy owner and any affected third parties.
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Cleanup and disposal
In the case of asbestos, a common pollutant in old buildings, an asbestos cleanup must be carried out before any demolition work to prevent the release of asbestos fibres into the air, which could cause respiratory issues for those exposed. Another example is the release of lubricating oil from a machine into the surrounding soil, which resulted in remediation and third-party bodily injury claims exceeding $5 million.
Pollution liability insurance can provide coverage for cleanup costs, including emergency response expenses. This type of insurance is important because general liability policies typically exclude pollution-related events, leaving businesses vulnerable to financial risk. Environmental pollution insurance can also cover claims related to the cleanup of third-party disposal sites if the waste disposed of by the business later becomes a pollution concern.
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or "Superfund") was enacted in 1980 to address the cleanup of abandoned or uncontrolled sites containing hazardous substances. The average cost of a Superfund cleanup site on the National Priority List is approximately $30 million.
To manage cleanup and disposal effectively, businesses should be aware of their environmental liabilities and ensure they have adequate insurance coverage. This includes understanding the "cradle-to-grave" liability concept, which means businesses are responsible for the waste they generate from creation to disposal, including any damage caused by improper waste disposal.
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Third-party bodily injury
Pollution liability insurance is designed to protect individuals and businesses from financial losses in the event of pollution-related incidents. This includes coverage for third-party bodily injury claims, which can arise from a variety of pollution sources, such as chemical leaks, unmanaged dust, asbestos, and noise pollution.
When a third party sustains bodily injuries due to pollution, they can file a claim with the responsible party's insurance company. This claim will seek compensation for medical expenses, including hospital bills, rehabilitation costs, and ongoing treatment related to the injury. It is important to note that the claim process can be complex, and seeking advice from a personal injury attorney is recommended to navigate the legal intricacies and ensure a fair outcome.
In addition to medical expenses, third-party bodily injury claims can also provide coverage for other financial losses incurred by the injured party. This includes lost wages due to their inability to work during recovery, rental car costs if their vehicle was damaged, and even compensation for non-economic damages like pain and suffering resulting from the injury.
The scope of third-party bodily injury coverage in pollution liability insurance can vary depending on the specific policy and the state in which the incident occurs. Some states have minimum liability requirements for insurance policies, while others have no-fault systems that may impact how injury costs are covered. It is important for individuals and businesses to understand the specifics of their pollution liability insurance policy to ensure they have adequate protection in the event of a pollution-related bodily injury claim.
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Business interruption
The cost of business interruption insurance varies depending on several factors, including the size of the company, the industry, the number of employees, the amount of coverage needed, and the company's location, revenue, and claims history. It is important to understand the terms of your policy, as there may be limits to the types of expenses and revenue loss that can be claimed. For example, coverage may be restricted to a certain financial period, such as 12 months.
To file a business interruption claim, it is important to act promptly and provide quick backup to substantiate your claim. The insurer will review the claim to determine if the event is covered under the current business interruption coverage. If a business interruption occurs due to environmental pollution, businesses with Site Pollution Incident Legal Liability Select (SPILLS) coverage can benefit from a rapid response and access to claims professionals and resources.
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Frequently asked questions
Pollution liability insurance covers all pollution liability claims. If a company is found liable for causing pollution, this insurance will cover the costs.
Pollution liability insurance covers incidents of sudden or gradual pollution. It also covers third-party claims for bodily injury, property damage, and cleanup arising from pollution conditions.
Contractors and commercial property owners are most susceptible to pollution liability claims. This is especially true for contractors who work with heavy machinery and large amounts of fuel, herbicides, pesticides, and fertilizers.
Most general liability policies do not cover environmental liability claims. After the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, insurance companies tightened the wording in general liability policies, excluding almost all pollution.
There are two main types of environmental insurance: contractors pollution liability (CPL) and pollution legal liability (PLL). There is also site pollution liability insurance, also known as premises pollution.
