Small-business owners who don’t have environmental pollution insurance may be at risk and not even know it, according to industry experts.
Environmental pollution coverage was originally designed to address the needs of corporations involved in large lawsuits or unintended financial hardship related to catastrophic losses associated with spills, leaks or other unanticipated events that impacted the environment and health of the surrounding community.
Today, the list of adverse events has grown to include legal liability for pollution, cleanup costs, loss of income to other business owners, injuries and disruption of services.
Due to changes in the law and a more complex supply chain, even small business owners may be at risk for environmental pollution and related damages. Farmers, trucking and distribution providers, small manufacturers, and even dry cleaners are just a few examples of small business owners that have been hit with big lawsuits due to the impact on the environment.
Waste products and chemical spills are common causes of concern and are likely to impact other small business owners such as contractors and consultants. In fact, real-estate-related concerns are one of the most significant sources of environmental and pollution-based litigation, especially those concerned with remodeling or remediation. Specialty trade and general contractors are all at risk.
Environmental pollution policies can vary widely, but most are written on a “claims made” rather than occurrence basis. Coverage usually includes legal liability, cleanup costs, restoration and development, transportation insurance, storage pollution liability, property transfer, secured creditor, and closure/post-closure related expenses. Both on- and off-site pollution and contamination can be included, with coverage for bodily injury, property damage and cleanup costs.
Small business owners seeking to buy or sell property or other business assets are increasingly calling for environmental insurance policies to be in place prior to the sale. In fact, buyers and banks are likely to back away from a deal without the protection of pollution insurance in place.
Because policy terms tend to be longer than average, it is important to plan ahead. Environmental pollution policies can be difficult to find, especially if there has been a prior claim or certain types of high-risk business associated with the property. Common examples include drycleaners, medical or vet offices, or even gas stations. In fact, even clean sites without a history of spills or toxic chemicals may still encounter problems obtaining coverage due to the adjacent properties, further exacerbating the total extent of the problem.
Finally, changes to reporting by CEOs and other top brass have resulted in renewed interest in pollution and environmental coverage. Under the new guidelines, officers are required to personally sign off on corporate financial statements, including potential liability concerns related to environmental damages.
Fortunately, it’s possible to find cost-effective premiums based upon the specifics of your business. Just ask your agent about environmental pollution protection.