Mask Off: Everything You Need to Know About Pollution Liability Insurance
Third-Party Coverage
This coverage will protect your business if it causes pollution-related losses to others. This means that pollution liability insurance will provide coverage for any third-party claims brought against your company.
The following are the different types of pollution insurance coverage provided for third-party claims:
Coverage for Contamination of the Environment Due to a Business Operation
Most manufacturing companies generate huge quantities of hazardous materials as a byproduct and discard them as waste. If not disposed of properly, these chemicals can have severe effects on people, such as causing injury, illness, or loss of life. Pollution liability insurance covers the costs of cleaning up the environmental contamination caused by your business operations.
Imagine you own a soft drink manufacturing company and you produce tons of chemical waste as a byproduct on a daily basis. One day, your waste drainage system malfunctions and a huge amount of chemical waste ends up deposited in a nearby pond. The local ecosystem has been destroyed as a result of a malfunction in your company’s operations.
An environmental organization decides to file a lawsuit against your company. The judge rules that your company is responsible for cleaning up the contamination. Your pollution liability policy will take care of your costs for clean-up.
Coverage for Lawsuits and Legal Fees
Garlock Sealing Technologies was known for manufacturing seals for pistons on steam engines. The company was founded in 1887, and its products were widely used in the United States. However, for many years the company’s employees worked in close proximity with asbestos, which led to them being especially vulnerable to lung cancer. Thousands of people sued the company and asked for compensation. By 2010, Garlock was slammed with over 900,000 asbestos-related claims, and filed for bankruptcy.
Clearly, pollution related claims have the potential to destroy your business. Thankfully, there’s pollution liability insurance which provides coverage for legal fees, investigation costs, and court expenses.
Coverage for Errors and Omissions
If your business is held liable for wrongful acts performed while providing professional services, pollution liability insurance will provide coverage for losses incurred due to it.
It also covers the costs incurred from addressing the damages the error caused. This type of coverage is essential for architects, engineers, and consultants.
For example, imagine a consultant is hired to advise a client about the state of their property. They declare that the property is free from any sort of pollutants or contaminants. However, the client later finds a black mold infestation in the property and it is determined that the infestation had been there when the consultant had inspected the building. The client decides to file a lawsuit against the consultant. Pollution liability insurance will cover the losses that the consultant will incur from the claim.
