5 Reasons Pollution and Environmental Claims are Rising

Apr 12, 2022

Environmental insurance (also known as Pollution insurance) provides coverage for loss or damages resulting from the unexpected release of pollutants, including claims for bodily injury, property damage, cleanup costs, and business interruption.

It’s important to know that standard General Liability and Property insurance policies exclude most losses connected to pollution. Unfortunately, many insureds mistakenly believe that their Liability and Property insurance policies cover pollution-related claims, losses, and damages, which leaves them exposed to potentially costly risks.

It鈥檚 also a mistake to only associate the need for Environmental insurance coverage with certain types of businesses, such as companies that produce hazardous materials. In fact, pollution comes from a variety of industries, businesses, and sources that you wouldn鈥檛 necessarily consider to be at risk. Pollutants are any irritant or contaminant; including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. Any material, substance, or product that is introduced into the environment for reasons other than its intended purpose can be considered pollution.

While many businesses would benefit from Environmental insurance coverage, the following industries have the biggest risk factors and need for specialized coverage:

  • Industrial/manufacturing
  • Energy
  • Cannabis
  • Real estate
  • Agriculture
  • Construction
  • Transportation
  • Hospitality

Environmental and pollution claims are rising year over year, and there are five main contributors to this trend:

Natural disasters. The rise in Environmental and Pollution insurance claims is partially driven by an increase in natural catastrophes, such as and . Severe weather events can have major environmental repercussions; damaging buildings, construction sites, infrastructures, containment systems, etc. As a result, potential pollutants, including pesticides, fuel oil, animal waste, and more, can be released. For instance, after Hurricane Harvey hit the Houston area, there were damages to local petrochemical refineries and chemical plants, which released chemicals and petroleum into the environment. This resulted in significant cleanup costs and Environmental Liability exposures.

Aging infrastructure. Aging infrastructure is another driver of increased claims activity. In many industrial plants and other aging facilities, the machinery, equipment, drains, clarifiers, sumps, and below-grade structures don鈥檛 meet today鈥檚 environmental standards. If the building owners haven鈥檛 upgraded the infrastructure in decades, pollution has accumulated over the years. Now, instead of updating equipment to meet current environmental standards, many building and business owners are relying on their insurance policies to protect them from environmental losses. Businesses rationalize this practice by saying they can save money this way because their pollution protection policy rates, which may provide millions in limits, are lower than the cost to update their infrastructure.聽

Mold. We鈥檝e seen an recently, often due to contractors disturbing sewer lines and plumbing structures. Many property owners have discovered mold during renovation and construction projects, which are usually attributed to older buildings. Mold from water damage, condensation, and leaks is causing health illnesses in individuals exposed to it 鈥 such as asthma and other lung issues, sinusitis, bronchial issues, and skin rashes. Mold is an ongoing 鈥 and potentially costly 鈥 liability that can impact companies across all industries. Therefore, companies must develop a mold prevention plan to control moisture and prevent mold (and its related problems). This should include conducting regular site assessments to identify potential risk areas, inspecting roofs, HVAC systems, pipes, drainage, and airflow, and ventilating areas exposed to heavy moisture.

Evolving definitions of 鈥減ollution.鈥 Pollution is not just caused by smoke and oil, as is the common perception. Consider this: several years ago, a food warehouse caught fire, causing the cheese and butter they produced to liquify and run into the sewer system. When these dairy products cooled and solidified, they clogged the sewer system, causing their neighbors to file business interruption claims. When the warehouse filed a claim on its General Liability insurance, it was denied, based on the policy鈥檚 pollution exclusion, resulting in an out-of-pocket expense of $550,000. In fact, a wide range of pollution and environmental claims are impacting all types of industries. In the hospitality industry, a woman died after contracting Legionnaires鈥 disease in a Las Vegas hotel鈥檚 Jacuzzi. Lawyers for the victim鈥檚 family proved that the hotel knew the bacteria was present in the building鈥檚 water system for months prior to the victim鈥檚 stay. This claim wasn鈥檛 covered under the hotel鈥檚 General Liability insurance, so the hotel had to pay millions of dollars to the victim鈥檚 family.

Chemical Contaminants. Glyphosate, a chemical in a popular weed killer sold globally, has been found to cause chronic health issues, including non-Hodgkin鈥檚 lymphoma. In addition to domestic chemicals, there鈥檚 been more recent scrutiny around PFAS chemicals, also referred to as 鈥渇orever chemicals.鈥 PFAS, which are used in numerous household items, cleaning products, fabrics, plastics, and more, don鈥檛 break down and can accumulate in the environment (and the human body) over time. Companies using, selling, or distributing glyphosates and PFAS have been found to be responsible for damages related to the use of the chemicals. In many states, claims are rising due to the presence of PFAS in groundwater. Exposure to the man-made chemical PFAS has been linked to adverse health effects, according to the Some industry experts believe that PFAS exposure is , and if that鈥檚 the case, the risk (and associated costs) could be huge.聽聽

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The 麻豆放映免费 Environmental Insurance Team

麻豆放映免费鈥檚 team of environmental underwriters have dedicated their entire careers to the environmental sector 鈥 they are environmental professionals that happen to sell insurance. Our brokers have backgrounds as environmental consultants and geologists, which gives you and your clients a significant advantage. When it comes to environmental coverage, you don鈥檛 want a generalist broker. With the 麻豆放映免费 team, you can trust our brokers have worked every angle of the environmental industry and can customize our exclusive program capabilities for any environmental coverage need.
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Whether they realize it or not, most every business has some sort of environmental exposure. It鈥檚 more important than ever for companies to evaluate their environmental risk profile and secure appropriate insurance coverage. At 麻豆放映免费, we don鈥檛 have generalist brokers; our dedicated team of environmental brokers has worked every angle of the environmental industry and knows it inside and out. By partnering with 麻豆放映免费, you鈥檒l have an industry-leading wholesaler on your side, working with you and your clients to secure the coverage 鈥 and peace of mind 鈥 your clients need.

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