Environmental Liability

Environmental liability: a concern for your business?

Evolving attitudes, new legislative and regulatory initiatives, and constant product and process innovations continue to make environmental compliance and repercussions for violations of environmental laws a significant concern for today’s business owners. Since pollutants are surprisingly common and exist in many different forms, most businesses, regardless of whether or not they handle hazardous materials, have some type of environmental liability. However, the typical general liability policy often does not provide enough protection for pollution exposure. For many businesses, obtaining environmental impairment liability insurance coverage—either through a separate policy or by obtaining a specific endorsement—is becoming a critical part of risk management.

What Is Environmental Impairment Liability Insurance?

Environmental impairment liability insurance protects businesses from environmental damage caused by contaminants released into or on land, the atmosphere, or any watercourse or body of water. These policies may cover the expense of both on- and off-site environmental cleanups mandated by the government; bodily injury or property damage liability; defense costs for environment-related lawsuits; business interruption costs; loss of value of third party property as a result of contamination; and liability of parties contracted by your business.

How Can You Be Sure?

Environmental problems can surface from previous business actions unknown to you. There may be existing pollutants on your property, or your company’s disposal procedures may be inadequate. Environmental liabilities often have unlikely origins, and there may be no indications that particular problems exist. In light of this, here are a few steps you can take to help minimize the risk of environmental liabilities on your business.

1.     Evaluate your history. Check for problems, both past and present, on any land your company owns, and be sure to use extra caution when purchasing new sites.

2.     Examine your risks. What chemicals do you use? If you have a subsidiary company, what chemicals does it use? Do you store hazard- use? Do you store hazardous materials on site? What are your disposal procedures? These are just a few of the questions you should consider in your overall risk analysis.

3.     Create an emergency procedure. Make detailed preparations for handling possible accidents and train your employees accordingly. The plan should be accessible at all times, and a copy should be kept at an off-site location.

4.     Be aware of federal, state, and local regulations. These may vary according to area and type of business operations. Also, be sure you understand reporting requirements in case of possible accidents.

5.     Report any accidents immediately. Notify the appropriate regulatory agencies of any accidents that may lead to environmental contamination; then, begin containment and cleanup immediately. Also, give us a call so we can start acting on your behalf.

Businesses of all sizes and types can potentially face pollution liability, the effects of which could be devastating to a company’s finances and its ability to continue business operations. While some businesses just need an endorsement to their general liability policies, others may need separate environmental impairment liability coverage for full protection. Please feel free to get in touch with one of our qualified insurance professionals for more information.

Risk Manager Online Vol. 16 No. 3 Copyright © 2008 Liberty Publishing, Inc.