Clients in virtually every industry face environmental risk and liability to some degree, making the addition of a pollution policy very important to an insurance portfolio. A well tailored pollution policy is designed to provide the exact coverage needed to insulate their business from environmental risk.
So, what is covered by a pollution policy?
In a broad sense, pollution policies will provide 3 different coverage’s:
- Clean-up costs – can be on your site, or a 3rd party site (policies are available in either variation, or a combo of both)
- Bodily injury and property damage – If someone gets sick or injured as a result of your pollution incident, this would be covered. If you damage someone’s property, or diminish their property value this would be covered.
- Legal defense costs, and non-criminal fines and penalties (not all policies cover fines and penalties, only certain insurers offer this and typically only if specifically requested by the broker)
How is coverage triggered?
The coverage is triggered when a previously unknown pollution condition is first discovered during the policy term. Provided the pollution was unknown before the policy went into effect, clean-up coverage applies even if the pollution actually occurred before the policy was effective. It’s important to note that most pollution policies have specific claim reporting restrictions due to being written on a “claims made” policy form. If you know of an incident or event involving pollution that may result in a claim, you need to report it to your insurer ASAP, and definitely before the end of the current policy term (even if no allegation/claim has arisen yet). Failure to report it on time can very likely result in the claim being denied.
To learn more about environmental risk in specific industries please visit our other pages: