Environmental liability insurance, also known as pollution insurance, provides protection for environmental risks faced by certain businesses. It helps cover pollution legal liability and cleanup costs.
Environmental hazards can arise from many sources and can affect businesses in almost any line of work. Under both federal and state laws, any business, organization, or individual could be held legally responsible for any pollution damage they cause to properties, individuals, and the environment itself.
Depending on the pollution conditions, you might have to hire environmental consultants and pay for expensive remediation. Your staff, neighbors, or customers could suffer medical issues or file a lawsuit. This is where environmental liability insurance can help.
Environmental liability insurance, also known as pollution insurance, provides businesses with liability coverage for environmental risks from pollution exposures, as well as any pollution legal liability and cleanup costs they might face.
Environmental liability coverage can often be added as an endorsement to your general liability insurance for an added cost, as it is typically not included with this policy. In fact, many general liability policies have an “absolute pollution exclusion” that denies coverage for most pollution and environment-based events.
Environmental liability insurance covers damage resulting from an environmental mishap, including:
If a non-employee suffers an injury or illness from pollution unexpectedly released by your business, environmental liability insurance can help pay for their medical expenses. It also covers legal expenses if the individual sues your business for the harm it caused.
An environmental insurance policy can cover expenses when pollution from your business accidentally damages or destroys another person’s property.
Environmental insurance can cover cleanup or remediation costs that result from your business operations.
Pollution liability insurance typically includes business interruption coverage, which protects your business if it's forced to close temporarily due to an environmental accident. However, the inclusion of this coverage may depend on your industry risks and location.
Check with an agent when you buy a policy so you know what coverage is included.
Environmental liability insurance benefits a wide range of industries that risk generating pollution that damages the environment around them.
Several industries that often buy this coverage as part of their risk management plan for dealing with pollutants include:
Also referred to as contractor’s pollution liability insurance (CPL), environmental insurance can provide coverage for a variety of construction contractors who deal with solvents and other chemicals that might be part of an accidental spill.
For example, if a general contractor is working at a construction site that contains hazardous substances, and stormwater runoff from the site threatens aquatic life in a nearby river, this policy would protect the contractor financially from mitigation efforts and site pollution liability.
Manufacturing businesses may find that pollution liability insurance is a necessity for their day-to-day operations, as it can protect them from liability over any damaging leaks of toxic substances from factories or other locations.
For example, if a metal manufacturer regularly uses hazardous chemicals to treat their products, and a storage tank accidentally leaked into a nearby ravine, environmental insurance would help pay for lawsuits over harm to the surrounding area and any necessary cleanup costs.
Businesses that specialize in the distribution or transportation of manufactured goods such as these may find that pollution coverage could protect them from inherent risks involving hazardous materials, as well.
Healthcare facilities may find that environmental liability coverage is necessary to help protect their handling and disposal of hazardous waste from their premises.
For instance, if a medical office is trying to throw out used needles or bandages, and a trash bag accidentally rips and spills its contents into a storm drain, the office might face legal action over the improper disposal of hazardous materials. Environmental insurance could help cover legal costs, including court fees or a settlement.
Some business-related mishaps might cause environmental pollution, but are actually covered by policies other than environmental liability.
Exclusions from environmental coverage include:
If a customer’s property was damaged by a fire caused by your business, it would be covered by your general liability insurance.
If your own business property was damaged, it would be covered by your commercial property insurance or business owner’s policy (BOP). A BOP combines general liability coverage and commercial property insurance in a single policy at a discounted price.
If any hazardous or toxic materials were found in products manufactured or sold by your company, you would need to be covered by a product liability insurance policy.
If an employee is injured or becomes ill due to a work-related pollutant, such as asbestos at a construction site, workers’ compensation insurance would cover the employee’s medical expenses. It would also cover your legal costs if the employee sues over the injury.
To find the right insurance solutions for your business, fill out our free online application to get quotes from top-rated providers.
While some carriers offer environmental insurance as a standalone commercial insurance policy, most offer it as an add-on to general liability insurance or a commercial package policy (CPP).
A CPP combines general liability and commercial property insurance into one policy, with more coverage options and policy limits than what’s typically available in a business owner's policy.
It’s important to carefully review your insurance policies to see what exclusions they might have and to make sure you’re covered. For any questions about coverage, you can contact an Insureon agent.
Yes. Environmental liability insurance and pollution liability insurance both refer to the same type of insurance coverage.
Some industries use different terms for the same type of coverage. For example, contractors and other construction professionals often see this policy referred to as contractor’s pollution liability insurance.
In addition to industry differences, insurance companies may use different terms for similar insurance products. Check with an agent if you're unsure which type of coverage you need.
Yes. Many larger companies that own or rent their workspace can add premises pollution coverage as an endorsement to their environmental insurance policy.
Premises pollution liability (PPL) coverage, which is sometimes referred to as site pollution liability, provides first-party coverage for bodily injuries, property damage, or environmental damage that occurs at a location owned, operated, or leased by the policyholder.
It can cover spills and leaks that occur on the property itself, as well as underneath the property or in any nearby areas that are affected by pollutants from the property.
General liability insurance covers common business risks such as customer injuries, damage to a customer’s property, and advertising injuries. While it doesn’t typically include environmental insurance, you can often add it as an endorsement.
Environmental claims can be costly so it’s important to avoid any coverage gaps, especially if your business might be held responsible for pollution. Insureon can help ensure that your insurance policies provide all the coverage you need if your business deals with hazardous materials.
Complete Insureon’s easy online application today to get insurance quotes from top-rated U.S. carriers. You can also consult with an insurance agent on your business insurance needs, including any environmental concerns.
Once you find the right insurance products for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance the same day.