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Is your pollution clean up covered?

Pollution To piggy back on Steve Sink’s recent blog postSad Tale of a Phase 1 – I find that most business owners are unfamiliar with this particular coverage on their policy. As a matter of fact, I often hear people ask me if they really need it.

As in this situation, I am sure the owner of this building probably did not think that he had an exposure for this type of loss either.

So what types of incidents would need to occur for this coverage to be effected? Well the first thing is that it has to be a result of a covered loss. In short, that means an accident had to have occurred which resulted in a pollution spill. For example:

  • A piece of equipment overturns during its use, spilling fuel into a body of water causing pollution.

  • A leak in a line at a manufacturing company accidentally dumps chemicals or chemical waste into the water supply.

  • A building owner has several oil tanks that are damaged during a fire and leak oil into the ground water causing pollution.

  • Old paint and cleaning supplies that has been stored is spilled and penetrates the soil.

Pollution can have an effect on many different industries. It is not just manufacturing companies or chemical companies that are at risk. Those companies should have a stand alone pollution policy to cover their environmental exposure.

Another consideration to understand is the limitations on coverage. Most insurance companies only allow minimal coverage for these incidents unless you increase your coverage.

Most policies will only cover $10,000-25,000 for pollution clean-up. While it may seem like a lot of coverage, it is easy to exceed these limits when you consider debris removal and clean up of the site after a loss occurs.

In order to avoid having a "Sad Tale" of your own, make sure that you address your pollution exposure with your agent annually.

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