Specialty Environmental Risks Insurance

Specialty Environmental Risks Insurance is a type of insurance that specifically covers businesses and individuals for potential losses due to environmental hazards. These hazards can range from natural disasters such as floods and earthquakes, to human-made events such as chemical spills and pollution.

This type of insurance is designed to protect businesses and individuals from the financial consequences of environmental hazards. These hazards can cause significant damage to property and can lead to costly clean-up and remediation efforts. Specialty Environmental Risks Insurance can provide the necessary financial protection to help businesses and individuals recover from these events.

One of the key features of Specialty Environmental Risks Insurance is that it is tailored to meet the specific needs of the policyholder. This means that it can be customized to cover a wide range of environmental hazards, including those that are specific to a particular industry or location. For example, a business that operates in an area prone to flooding may require coverage for flood damage, while a business that operates in an area prone to earthquakes may require coverage for damage caused by seismic activity.

Another important feature of Specialty Environmental Risks Insurance is that it can provide coverage for both property damage and liability. Property damage coverage can help businesses and individuals cover the costs of repairing or replacing damaged property, while liability coverage can help protect against claims made by third parties for bodily injury or property damage.

In addition, Specialty Environmental Risks Insurance can also provide coverage for business interruption and extra expense. This can help businesses and individuals cover the costs of lost income and additional expenses incurred as a result of an environmental hazard.

In conclusion, Specialty Environmental Risks Insurance is a type of insurance that provides financial protection against potential losses due to environmental hazards. It is tailored to meet the specific needs of policyholders, and can cover a wide range of environmental hazards, including property damage, liability, business interruption and extra expense. It is an essential coverage for businesses and individuals who are at risk of environmental hazards, and can help them recover from these events and move forward.

Asbestos abatement consultants determine if a property contains asbestos and suggests ways to best mitigate any asbestos exposures found. Their professional liability exposure arises from mistakes they make in the assessment process and in testing during and after completing a mitigation project. Exposures can also arise if suggested methods are not appropriate or are not effective. Carriers that insure asbestos abatement contractors may extend liability coverage to also apply to asbestos abatement consultants.

At one time, many public buildings, offices, and school buildings used asbestos materials in their construction because of their ability to reduce the spread of fire. Those once-touted products have since been found to be extremely toxic. As buildings that contain asbestos are remodeled, remediated, or demolished, contractors must first remove or contain any asbestos material in them before starting any other construction activities. Liability insurance coverage on specialized asbestos abatement contractors is extremely difficult to place.

Contractors that work on public projects are required to provide surety bonds. Carriers that specialize in insuring asbestos and/or lead abatement contractors have expanded into the field of surety bonds for these contractors because they understand their exposures.

Coverage for auto salvage and junk yards is considered difficult to place from the standpoint of both general liability and property exposures. Poor housekeeping and highly toxic and inflammable solvents, batteries, and old tires on the premises are part of the problem. Open welding operations to remove parts can cause explosions due to the presence of gasoline and other flammables. Pollution is a major concern.

Brownfields are abandoned, idle, or underutilized industrial and commercial properties whose expansion or redevelopment is complicated by contamination (real or perceived). Some of these sites were contaminated when the materials discharged into the ground deemed safe and legal at the time are now considered pollutants. As more substances are determined to be harmful (such as leaded gasoline and radon), many older sites are officially designated as contaminated. Lenders and industrial corporate owners frequently allow brownfields' taxes to become delinquent and let the city take over. Some states have enacted laws that allow a certain amount of contamination to remain after a site has been cleaned up. These laws address the need for the involved parties to restore the property to active use, while still protecting the owner's, operators, and seller's liability. Brownfields package policies cover remediation stop loss, residual contamination cleanup, third-party liability, and environmental impairment liability for cleanup operations and continued operations as an ongoing business. Various limits are available.

Contractors, consultants, and engineers need the services of special testing laboratories to sample and analyze ground water, waste, waterways, air quality, soil, and hazardous waste. These laboratories may be independent contractors or may operate in connection with environmental consultants or engineering firms. Some labs are mobile and are transported to construction sites. Separate insurance programs are available for testing laboratories involved in acoustics and vibration, biological, chemical, construction materials, electrical, geotechnical, asbestos, mechanical, and thermal testing. Professional liability and pollution liability coverage is available.

This coverage is properly classified as a specialty aviation insurance coverage. It applies to insureds that use aircraft (including drones or UAVs) to dust or spray insecticides or herbicides on crops or other vegetation. The hazards for these operations are greater than those associated with normal aircraft operations because the chemicals the aircraft applies may be dangerous to animal life or neighboring crops which requires that the aircraft operations be performed at low altitudes. The three types of liability coverage available are third-party liability coverage without chemical damage coverage, third-party liability coverage including protection for damage caused by using insecticides, and liability protection for damage from all but a few chemicals. Coverage applies to both bodily injury and property damage. Prior loss experience, the operator's financial condition, the number of pilots and their experience, the use of UAVs or drones, and the types of chemicals sprayed are key factors in underwriting this business.

Dredging contractors move dirt, sand, and accumulated debris from waterways (fresh and saltwater), primarily to redirect, clear, or establish new channels. Many dredging contracts involve coordination with the Army Corps of Engineers. Dredging equipment is usually on a barge that floats over the site.

Environmental consultants' professional liability coverage insures against errors and omissions claims alleging that the consultant's advice, assessment, or recommendations resulted in economic damages. One of the most important components of the coverage is often the defense coverage. It is written on a claims-made basis and is subject to a retroactive date.

Bid and performance bonds for contractors engaged in pollution cleanup and other environmental work are available from specialty insurers. These bonds supplement the pollution liability, commercial general liability, and auto liability coverages available to these contractors. Surety limits are provided on a per-job basis and can be substantial.

Commercial general liability coverage forms and policies exclude loss or damage due to contamination and pollution. Environmental impairment liability coverage is available to pay for damages due to such environmental impairment, including clean-up costs. The coverage purchased should be coordinated with the commercial general liability (CGL) policy in order to prevent any duplication of coverage, and to prevent gaps in coverage that may occur due to variations in the CGL-provided pollution coverage.

Environmental remediation contractors clean up contaminated properties. Their liability exposures include inadequate or incomplete remediation; spread of contaminated soil during remediation or excavation; atmospheric emissions from remediation activities; contamination of aquifers; rupture of underground utilities or pipelines; spills or leakage from contractors' tanks; mixing of incompatible materials/wastes that results in fire, explosion or release of hazardous vapors; and improper tank installation. General liability, pollution liability, and professional liability policies can be written on a blanket basis or on a specific project.

Environmental site assessment is an inspection that must accompany any application for a lenders environmental cost or property transfer liability policy. It is sold to real estate buyers and lenders and protects them from Superfund-type liabilities that arise from a commercial property that has undetected contamination at the time it is sold. Unexpected remediation costs can arise if it is later determined that the property has environmental contamination problems. Environmental site assessments are conducted by only approved independent consulting engineering firms. Contamination discovered during the assessment will not be covered under the applied for policy. Areas determined to not be contaminated are approved for coverage.

Coverage is available for businesses that transport hazardous materials. The Motor Carrier Coverage Form is normally used to cover auto liability and physical damage. General liability coverage may be modified to offer some pollution coverage and the MCS-90 endorsement is available for hazardous materials carried under the Motor Carrier Act.

The Environmental Protection Agency (EPA) requires owners and operators of hazardous waste treatment, storage, or disposal facilities to either purchase insurance or provide other proof of their ability to pay for third-party damages caused by both sudden and not sudden occurrences of accidental pollution. Hazardous waste insurance covers companies actively involved in generating, processing, transporting, or disposing of hazardous waste. Coverages available include general liability, automobile liability, workers compensation, umbrella liability, and property. The Department of Transportation (DOT) MCS-90 endorsement required by the Motor Carrier Act is included where necessary. Commercial general liability usually has high limits and a wide range of deductibles. Coverage automatically includes any required EPA or state language by endorsement and certificate.

The Environmental Protection Agency (EPA) establishes requirements for owners and operators of non-hazardous waste landfills that require bonds. These bonds are written by surety companies that specialize in them and other miscellaneous bonds. The bond program for non-hazardous waste landfills is designed for municipal solid waste landfills and demolition facilities. The financial responsibility may be accomplished through bonding, insurance, letters of credit, or trusts. The terms of the bond require that the operator continue to monitor the ground cover and ground water and maintain the landfill for 30 years after it is closed. This bond guarantees that the operator will perform such monitoring and required maintenance.

Sanitary landfill operators are held to a high degree of care in the way they operate their businesses. A program is available for refuse haulers, solid waste landfill owners and operators, waste transfer stations, recyclers, and street cleaners. Companies that handle hazardous waste materials, infectious or radioactive waste, or asbestos are not eligible.

This coverage can be written on a stand-alone basis or it can fill a gap in a general liability policy that excludes lead paint or pollution. Property managers, owners, landlords, and any party that controls the property is eligible to purchase this coverage. Varying per-claim and aggregate limits are available.

Lead additives were eliminated from paint used in residential and commercial applications in 1978. Many buildings painted before that date still have lead exposures because paint that chips exposes previous layers of paint. Lead paint removal contractors remove the lead paint so that it no longer poses a problem.

Financial institutions are increasingly concerned about their potential liability for cleaning up property if it is determined that the property on which they have made loans is contaminated by hazardous waste. Insurance coverage is available to protect real estate owners and lenders from government, state, and court mandated cleanup of contamination that is present but that was not detected when the property was purchased. Coverage also applies to costs associated with remedial investigation and feasibility studies, as well as defense costs that result from liability. It is sometimes known as secured creditor environmental exposure coverage.

Marine Operations: This coverage protects an insured vessel owner and operator for legal liability that arises from the Federal Water Pollution Control Act and its amendments. The original federal legislation that dealt with water pollution was the Water Quality Improvement Act of 1970. It imposed liability on vessel owners for cleanup of oil spills. The Federal Water Pollution Control Act of 1972 broadened the scope of the original legislation to also include liability for cleanup of discharges of hazardous substances as well as oil or petroleum products.

Non-Marine Operations: This insurance provides coverage for cleaning up polluted nonmarine property. It also covers potential future costs of additional cleanup and some third-party coverage.

This is professional liability coverage for contractors and laboratories that test for the presence of radon gas in the soil surrounding residential or other buildings. These contractors also provide services to remove or eliminate radon from the property.

The operations of recyclers or scrap dealers include collecting, breaking up, sorting, assembling, and delivering the salvage or scrap material to manufacturing plants that use the recycled products to make new materials for packaging consumer products.

This is a special pollution liability policy available for contractors that remove, install, or maintain underground or aboveground petroleum storage tanks and systems. It insures against claims that involve sudden or non-sudden releases of petroleum products that cause environmental damage. Deductibles apply and are used.

The same carriers that write coverage on underground storage tanks also write similar coverage on aboveground storage tanks. Refineries and bulk plants are likely candidates for aboveground storage tanks coverage. Carriers can cover tanks that hold chemical, paint, pesticides, and other liquid toxic substances. There is no age restriction on tanks but older tanks are usually charged higher premiums. These policies provide on-site cleanup and third-party liability.

This coverage was designed with the Environmental Protection Agency (EPA) to assist service stations, oil jobbers and others that own underground storage tanks to meet their financial obligations due to leaks from those tanks. It covers the cost of cleaning up leaking tanks and the resulting damage to property of others.

Pollution caused by vessels, such as the Exxon Valdez incident in Prince William Sound in Alaska, can lead to extremely large losses. The vessel pollution coverage pays damages for leaks and spills of crude refined oil and other chemicals by ocean-going vessels that harm the environment. The United States Coast Guard (USCG) must approve any insurer that provides this coverage before coverage is placed with it. If an incident does occur, all clean-up must be conducted according to the Oil Pollution Act of 1990 and any subsequent revisions.

Following are some examples of Specialty Environmental Risks Insurance claims and the corresponding insurance coverages that can help pay for them:

1. Asbestos Contamination: A construction company renovating an old building may inadvertently disturb asbestos-containing materials, leading to airborne asbestos particles. If people in the vicinity inhale these particles, it can result in serious health problems such as lung cancer or mesothelioma. In this case, the victims could sue the construction company for medical costs, pain and suffering, and other damages. Specialty Environmental Risks Insurance can help cover the cost of this lawsuit, including legal defense, settlement costs, and any awarded damages, thereby shielding the construction company from potentially massive financial harm.

2. Mold Infestation: Suppose a property management company fails to properly maintain a residential building, leading to widespread mold infestation. Tenants could suffer from allergic reactions or other health issues and may sue the company for negligence. Specialty Environmental Risks Insurance would step in to cover the costs of the lawsuit, including defense costs and potential damages, thus providing financial protection to the company.

3. Oil Spill: A transportation company could face a disastrous situation if one of its trucks carrying oil overturns, causing a significant oil spill contaminating a nearby river. This could result in damage to wildlife, the local ecosystem, and potentially the water supply of nearby communities. If the company is sued for cleanup costs and damages by local authorities, residents, or environmental groups, Specialty Environmental Risks Insurance could cover the costs associated with these lawsuits, including legal defense, cleanup costs, and any awarded damages.

4. Hazardous Waste Disposal: An industrial company that improperly disposes of hazardous waste, leading to groundwater contamination, could be sued by local communities or regulatory authorities. The lawsuit could claim damages for cleanup costs, property devaluation, and health problems caused by the contamination. The Specialty Environmental Risks Insurance could cover the costs of these legal actions, including the cost of legal defense, damages, and cleanup costs, thereby protecting the company from potentially crippling financial costs.

5. Air Pollution: A manufacturing plant could be sued if its emissions exceed regulatory standards, causing air pollution that affects nearby communities. People living in these communities could sue the plant for health issues caused by the pollution, and regulatory bodies could sue for non-compliance with environmental standards. Specialty Environmental Risks Insurance would cover the cost of defending these lawsuits, paying any fines or penalties, and any damages awarded to the plaintiffs.