What exactly is considered pollution in the eyes of insurance? Pollution is any material that can irritate or contaminate something or someone and cause damage. This definition opens the door to an infinite number of claims that could occur. Contrary to popular opinion, pollution is more than hazardous waste. In litigation, whether or not something is considered as pollution will be determined by a court of law, and the results can be surprising! Basically, if a material goes beyond its intended use and contaminates or irritates something or someone, the event could result in a pollution loss. How then can your business be protected against damage done from pollution?
If you are a contractor, you may find yourself coming across contract requirements for coverage with a Pollution Liability policy. You may wonder if it is really needed and what will such a policy cover verses your regular Commercial General Liability (CGL) policy. Did you know that most pollution is excluded in CGL policies? If you have an accident on the job, you may be responsible for clean-up and repair caused by pollution if you are without this coverage.
Pollution liability is a standalone policy for environmental insurance that can include coverage for contamination-caused losses and clean-up, which can be very costly. Pollution liability can benefit many other businesses beyond contractors, such as manufacturers, property owners and lenders, hotels, schools, and hospitals. This coverage can include protection against contaminants such as mold, chemicals, smoke, soot, bacteria, asbestos, lead, and more. These specific contaminants are excluded on CGL policies as a standard exclusion with very limited coverage. For example, a business could potentially see a loss due to mold with repair costs of $250,000 while their CGL policy allows for only $15,000 worth of coverage. A pollution liability policy with appropriate limits would cover that loss.
Pollution liability often runs at a very reasonable premium for businesses. If you have any questions regarding your business insurance or pollution liability, contact your agent today.