Should You Invest In Pollution Insurance?

Dec 20, 2023 By Susan Kelly

Pollution liability insurance, which covers damage claims from hazardous waste, is one commercial insurance coverage that freelancers and small company owners could need. Contractors should take precautions to avoid liability for any accidents on the site.

Companies in the oil, agricultural, building, excavating, waste depository, and asbestos abatement industries, among others, can all profit from pollution liability insurance. In an accident involving hazardous waste, insurance will pay for medical bills, repairs to your home, and any costs associated with cleaning up the mess.

Reasons Why Having Insurance Is Crucial

In the early to mid-1980s, pollution liability was typically included in business general liability policies. Insurance firms, however, have been omitting environmental responsibility from their standard public liability policies, necessitating the purchase of additional coverage for this risk.

Many clients may ask for confirmation of pollution liability insurance coverage from independent contractors before they would hire them. Projects to clean up the environment can go into the millions.

If a cleanup ends up being necessary, your financial interests will be safeguarded by this policy. Purchasing pollution liability insurance protects you from claims made by anyone who claims to have been harmed by a harmful chemical released due to your operations.

To Whom Does Insurance Apply?

For example, asbestos removal contractors and garbage dump operators have a clear need for environmental liability insurance. Pollution liability insurance may be worthwhile even if your industrial location does not handle hazardous material.

An examination you had done when you acquired the property may not have uncovered any hidden dangerous material, leaving you accountable for it if it turns up years later. Keeping up with the ever-evolving body of environmental legislation may be a full-time job, so it's essential to have enough liability coverage in place.

How Can Insurance Protect Against Environmental Claims?

Businesses may avoid financial ruin by purchasing pollution liability insurance, which safeguards them against various legal obligations. This insurance often covers claims made against a company due to pollution.

Companies can avoid severe financial trouble by purchasing environmental liability insurance to cover the expenses of fines and legal defense. If the policyholder's actions cause hurt or damage to third parties, the policyholder's pollutant liability insurance will likely cover the costs associated with those damages.

These policies often pay for medical bills, repairs to damaged property, cleanup of hazardous materials, and restoration of the site to its original state in the event of an accident. Further, legal fees are typically covered by pollution insurance policies. This is frequently needed to protect policyholders from claims and litigation arising from pollution.

Where Can I Purchase Insurance Against Potential Pollution Claims?

Insurance providers typically offer pollution liability insurance that sells policies to contractors. The cost will change based on factors such as the total amount of coverage you need, your deductible, and whether you buy this insurance alone or in addition to another commercial policy. Many businesses provide contractors with environmental liability insurance, and some such companies are:

Chubb

Chubb provides insurance for contractors through its Contractors Pollution Liability (CPL) and CPL/Errors & Omissions policies. Accounts for smaller businesses might receive specialized programming. The base premium starts at $1,500, and the self-insured retention begins at $5,000.

Travelers

Professional Practice Insurance for the Environmental Sector and Construction Industry is available from Travelers. This insurance provides errors and omissions (E&O) coverage for professional liability and pollution liability to safeguard against the financial impact of legal action.

AIG

To protect contractors against hazards not covered by typical general liability insurance, AIG offers the Contractors Pollution Liability coverage. Blanket and project-specific versions of this policy are possible, including product responsibility and pollution. All business service providers and builders can get insurance with a range of up to $75 million for a minimum of $2,50 per year.

Is Environmental Liability Insurance Necessary?

Large corporations with significant potential for environmental damage are often the ones that come to mind when one thinks about pollution insurance.

Pollution liability insurance is most useful for larger companies but may also help smaller firms like car repair shops and junkyards. It doesn't matter how big or little a corporation is; they might get sued for environmental harm.

Conclusion

Company owners and freelancers should invest in comprehensive business owner coverage to protect their assets. You should talk to an insurance agent about getting environmental liability insurance if you suspect your business activities might expose hazardous material.

It is too late to get coverage to protect yourself from liability risk if an event occurs on the project site or after you have already concluded the related activities. It would help if you kept in mind that standard general liability policies will not protect you from pollution claims.

You, and you alone, must make the ultimate decision. If you're unsure whether or not you need pollution liability insurance, it's best to do some research.

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