Pollution Liability

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Pollution liability insurance is a supplemental insurance policy written and designed to protect industries that may face claims resulting from hazardous waste, dangerous toxins, or pollution risks.  Most pollution liability insurance policies are secured by contractors, but some industries that use or rely on hazardous materials as part of the daily operations may need also need pollution liability insurance.  Example industries include but are not limited to dry cleaners hair salons, art studios, services stations,auto repair shops, and auto parts stores. 

Premiums and costs associated with pollution liability insurance policies are dependent on the type of business and the level of exposure inherent to that particular business.  Most pollution liability insurance policies are written to include damages which may occur at the time of business or for future damages which may result from the operations or constructions of the business or construction of the business.  A pollution liability insurance policy needs to include coverage’s to pay costs associated with cleanup loans and environmental assistance to neighborhoods programs. Policies should include cost overrun insurance, or an insurance that covers some, or all of the response costs caused by a known pollution condition at a site, that exceeds the estimated response action costs that have been accepted an approved by the insurer at the inception of the insurance policy.  A pollution liability insurance is a policy which will cover damages caused by a pollution condition from, or at, a site that is preexisting and unknown, or otherwise unknown at the time the insurance is first obtained, and, at a minimum, provides for all of the following:

1. A minimum policy period of five years after the completion of remediation activities, not including post-completion operation and maintenance.
2. A duty to defend and pay for defense costs in an amount at least up to the amount of coverage available under the policy, irrespective of whether an administrative or judicial order requires the insured to compensate any party or pay for damages, so long as their already exists a reasonably quantifiable legal obligation to pay those damages.
3. Damages include but are not limited to: property damages incurred at a site as an unforeseen and unexpected result of a pollution condition; bodily injury, property damage, and response action costs sustained or incurred by a third-party as a result of a pollution condition at a site.

A strong pollution liability insurance policy should include the following:

1. Protection coverage for sudden and gradual pollution
2. Expanded product liability coverage.
3. Over the road pollution coverage for all motor vehicles, watercraft, aircraft, which may be used or exposed to covered operations.
4. Limited non-owned disposal site exclusions for transferred, storage or disposal facilities.

In addition to a general pollution liability insurance policy, a business may need to obtain, Secured Creditor insurance, which will cover the following:

1. Response costs at a site incurred by the lender after a default by the borrower or foreclosure by the lender that occurs as a result of a pollution condition at the site, and costs are reasonably necessary to remediate the site for its intended use so that it may be sold.
2. Damages or other liability for a pollution condition at a site incurred by a lender as a result of that lender exercising a foreclosure option.
3. Loss or damage incurred by a lender as a result of a borrower’s inability to satisfy a loan obligation or due to the existence of an unforeseen an unexpected pollution condition.
4. A duty to defend and pay for defense of insured for damages due to a pollution condition.