Pollution coverage provides protection against losses and damages resulting from unexpected releases of pollutants. Standard property and casualty policies often do not offer adequate coverage for possible spills and cleanup costs, including assessment costs, emergency response, and defense costs.
Types of Pollution Coverage:
- First Party Pollution:
- Covers cleanup costs and damages for pollution damages done to property you own, lease, or occupy.
- Third Party Pollution:
- Covers cleanup costs and damages for pollution damages done to property you do not own, occupy, or lease.
- Includes coverage for third-party bodily injury, property damage, and environmental damage due to both gradual and sudden accidental pollution events.
Who Needs Pollution Liability:
- Property owners, operators, and managers.
- Commercial office buildings.
- Shopping centers/retail facilities.
- Municipalities.
- Educational facilities.
- Industrial facilities, including:
- Recyclers.
- Storage sites.
- Landfills.
- Warehouses.
- Manufacturers.
- Distributors.
- Gas stations.
Contractors Pollution Coverage
Who Needs it:
Why it's Necessary: If your work, even accidentally, causes pollution-related health risks to a client or community, costs can be high and not covered by your standard liability policy. These costs could be related to cleanup, legal action, or reputational damage, and they can be substantial if paid out of pocket.
Protection Provided:
- First Party Exposures:
- Covers the contractor's own losses due to pollution.
- Third Party Claims:
- Covers claims resulting from pollution conditions caused by covered operations performed by the contractor. These claims could include bodily injury, property damage, or environmental damage, including defense costs.
Examples:
- Fuel Tank Leakage:
- Internal corrosion of a fuel tank results in leaking fuel into the surrounding environment. The responsible party could be held accountable for groundwater remediation, property damage, and loss of income due to halted operations.
- Soil Contamination:
- An excavation contractor hits a below-ground oil tank during a project. The damage, not discovered for four years, leads to significant cleanup and remediation costs, which are not covered by a standard Commercial General Liability (CGL) policy.
- Water Contamination:
- A utility contractor strikes an adjacent sewer line while replacing a municipal water line, causing sewage to release into a basement and surrounding area. The contractor is responsible for the sewage cleanup, which is not covered by a standard CGL policy.
Pollution coverage is essential for various entities and contractors to protect against the significant financial risks associated with pollution incidents.
