Small Business Environmental Insurance
Environmental insurance is a basic requirement for businesses that use hazardous materials in their operations, but companies in many industries can benefit from this valuable protection.
Relatively routine events, such as a delivery accident resulting in spilled products or materials or improper disposal of company waste, can trigger environmentally related regulatory actions or lawsuits and cause a costly expense for which a small business may be unprepared.
Even if a company is innocent of environmental problems, it can be held liable if the previous owner of a company-owned facility dealt with hazardous materials or buried industrial waste improperly. This type of indirect contamination, which a company may not have caused, can result in cleanup costs or environmental claims from neighboring property owners.
As its name suggests, environmental insurance protects a business from pollution claims resulting from injury, property damage, and cleanup costs associated with the accidental escape or release of pollutants or hazardous materials.
Because the potential costs of environmental incidents are so high, those types of incidents aren’t covered by commercial property or liability insurance - creating the need for specialized policies dedicated to protecting businesses against environmental risks.
Environmental insurance comes in two basic forms. First-party pollution coverage protects your business against the cost of cleaning up spills or damage resulting from environmental contamination. This coverage may be necessary if your business uses chemicals in its operation or if your property was contaminated in the past.
Third-party coverage protects your business against allegations that the release of material from your site has affected others or if your product causes pollution while it is being transported or delivered.
Depending on your industry, other specialized forms of environmental insurance may be appropriate. Customized environmental insurance is available for contractors involved in abatement projects or those encountering materials during general construction projects. Environmental consultants can also purchase coverage related to their services.
Other companies, such as chemical plants, food processors, healthcare facilities, or businesses with storage tanks, should also consider site-specific environmental impairment liability insurance.
Even if environmental exposures rank low on your risk management concerns, a conversation with your agent or broker about environmental insurance may be a good idea.