Keep posted, keep informed.
The purpose of an environmental insurance policy is to fill the insurance coverage gaps created by pollution exclusions in liability and property insurance policies, according to the International Risk Management Institute (IRMI). Since pollution exclusions vary by the type of policy, environmental insurance policies vary as well.
There are over 100 unique environmental insurance policy forms available as of 2015. With nearly every commercial or construction business having at least one type of environmental liability exposure, according to Travelers Inc, it’s important to discuss what’s covered through an environmental insurance policy. It’s imperative to understand why commercial environmental insurance is needed for businesses today.
What Commercial Environmental Insurance Covers
Environmental insurance policies work with an insuring agreement that provides specific coverage for losses arising from the release or escape of pollutants. Some losses that this insurance coverage can be applied to include:
- Bodily injury
- Property damage
- Cleanup expenses (usually as required by environmental laws with available enhancements by class of business)
- Defenses costs (usually included within the limit of liability)
Common optional coverages include:
- Non-owned waste disposal sites
- Transportation of pollutants as cargo
- Business interruption
- Loss of rents
- Extra expense
- Reputational damage
- Midnight dumping on insured locations
- Coverage for fungi/bacteria as defined pollutants
- Amended definitions of cleanup costs for contaminates that are not regulated as hazardous materials (fungi/bacteria)
- Reputational damages
How Commercial Environmental Insurance Breaks Down
There are three types of environmental insurance policies: environmental impairment liability, contractors environmental liability, and professional liability. Each form covers different aspects of pollution issues:
- Environmental Impairment Liability – Coverage only applies to listed locations. This one covers first-party cleanup costs, business interruption, loss of rents and extra expenses.
- Contractors Environmental Liability – Coverage specifically applies for pollution events arising from the operations of the insured as described in the insurance application. Your insurance application form might actually become a part of your policy.
- Professional Liability – For most cases, professional liability for pollution related losses is only provided under a specific professional liability policy that does not have a pollution exclusion.
If you’re a commercial insurance agent, it’s important to make sure your client knows about the importance of commercial environmental insurance. With limited industry standards to go by on this particular topic, you’re on your own when researching this particular topic. While searching online can always help you out, we strongly encourage you to contact Mavon Insurance to get in touch with a commercial insurance broker to discuss this unique coverage.
About Mavon Insurance
At Mavon Insurance, we pride ourselves on our unique approach to insurance. We focus on integrity, communication, professionalism, respect and gratitude to help our clients succeed and place business in specialized markets. For more information about our products, or to become an agent, contact us today at (877) 426-2866.