Environmental liability insurance cost

Small businesses pay an average premium of $223 per month, or $2,675 annually, for environmental liability insurance.

Our figures are sourced from the median cost of policies purchased by Insureon customers from leading insurance companies. The median offers a better estimate of what your business is likely to pay because it excludes outlier high and low premiums.

Many small business owners obtain pollution coverage by adding it to an existing general liability policy, which typically has pollution exclusions from this type of coverage. Your premium will vary depending on whether you purchase this as a standalone policy or add it as an endorsement to your liability coverage.

While Insureon's small business customers pay an average of $223 monthly for environmental liability coverage, 38% pay less than $150 per month and 29% pay between $150 and $300 per month.

The cost varies for small businesses depending on their risks and the coverage limits they choose.

The cost of a pollution liability policy depends on specific business factors. One of the most significant is whether your business handles hazardous substances or is likely to have contact with them.

An insurance company will consider this and other relevant information about your business when setting your premium, including:

• Location of your business
• Coverage limits and deductible
• Industry risks
• Number of employees
• Business size and revenue
• Volume and scope of work
• Types of services and materials
• Years of experience
• Claims history

Let’s take a closer look at the key factors that could affect your environmental liability premium.

Your business location plays a key part in determining the cost of your environmental coverage, because it has an impact on the types of claims you might face during a site pollution incident.

Whether you’re near a residential, commercial, or industrial area, the price of nearby real estate can have a tremendous impact on your pollution legal liability, as well as your likely remediation costs from dealing with any emissions caused by your business.

If you’re in an area of industrial or former industrial sites, or one that’s known for having polluted conditions, such as a brownfield site, hazardous disposal site, or industrial contamination site, this would increase your environmental risks and you’d be more likely to have pollution liability claims.

If your business is in close proximity to residences, this would also be a significant factor as it would increase the likelihood of property damage, expensive cleanup costs, third-party claims made by property owners, and legal defense costs.

Your claims would be even more expensive in the event of a bodily injury, or if neighboring properties experience a business interruption and sue you for a loss of income.

The coverage limits you select can impact your insurance costs. The more coverage you opt for, the higher your costs will be. Higher limits also mean your insurance policy will pay out higher amounts in the event of an incident.

Your deductible can also impact your insurance costs. A deductible is the amount you'll need to pay out-of-pocket before your insurance policy kicks in. A higher deductible often means a lower premium, and vice versa.

The type of industry you’re in gives the insurance company an idea of how likely you are to face a pollution insurance claim and how expensive it might be.

If your business has storage tanks or deals with industrial chemicals and solvents, this will have a direct impact on your premiums.

In the construction industry, for example, you might face asbestos remediation, lead paint, or any number of environmental claims. General contractors and other contracting professionals often see this coverage referred to as contractor's pollution liability (CPL) insurance.

The more workers you employ, the more likely you are to pay higher insurance rates. This is generally because more employees equate to a higher likelihood of accidents, incidents, and insurance claims.

Proper risk management training around topics such as contamination containment, hazardous waste and hazardous materials disposal, and other pollution exposures will likely help reduce your claims and keep your insurance costs low.

The larger your company is and the more revenue your business generates, the higher your insurance costs will likely be.

This increase is because the higher your business revenue, the more work your business does, which means an increased likelihood of risk and insurance claims.

The size and scope of the projects your business works on can impact your insurance rates.

Larger, more dangerous and involved projects are likely going to increase insurance costs compared to smaller and safer work contracts.

The types of services your business performs or the type of products your business sells can have an impact on your insurance costs.

Businesses that engage in higher-risk environmental and pollution services will often pay higher rates than businesses that perform lower-risk services.

For example, a pool cleaner and a metal manufacturer may both need environmental insurance, but they would likely pay significantly different rates based on the relative risk associated with each industry.

The longer you and your business have been in operation, the lower your insurance costs may be. 

This is because your years of experience can signal to insurance companies that you're less of a risk due to experience and a positive track record.

The fewer insurance claims your business has, the lower your insurance costs will likely be. Insurance companies tend to see previous claims as a risk potential for future claims and will adjust your rates accordingly.

Keeping your insurance claims to a minimum will keep future costs low.

Some small business owners may decide to buy environmental liability insurance as a standalone policy. In this case, the company's environmental liability risks and coverage needs would play a large role in determining the cost of a policy.

For example, if an excavation contractor occasionally takes on jobs at sites that previously housed manufacturing or processing facilities, or involves visiting non-owned disposal sites, they may deem it necessary to protect themselves from uncovering any unexpected substances with an environmental insurance policy.

To determine the premium, the insurance provider would consider the contractor's liability exposure and potential risk of facing legal action over accidental release of pollutants or environmental damage.

While a standalone environmental policy may be more expensive than adding it as an endorsement to your general liability coverage, it is also likely to have fewer coverage gaps or exclusions, which could make it more suitable for your business needs.

Insureon is the independent marketplace for online delivery of small business insurance. We help business owners get quotes from top-rated insurance carriers, buy policies, and manage coverage online.

By completing Insureon’s easy online application today, you can get free quotes for environmental liability insurance and other insurance products, with underwriting from top-rated U.S. insurance companies.

Once you find the right policies for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance for your small business.