If your company’s work isn’t explicitly environmental in nature, you might think environmental liability insurance isn’t necessary. Many companies underestimate their exposure to pollution. Below, we define environmental liability insurance and explore some of the common misconceptions companies have about this insurance.
Environmental Liability Insurance Defined
Environmental liability insurance is a product that covers risk beyond ground and water pollution. There are two main types of environmental liability insurance: Pollution Legal Liability (PLL) and Contractors Pollution Liability (CPL).
Pollution Legal Liability
PLL insurance protects companies and property owners from costs associated with pollution cleanup, as well as liability related to property damage and third parties such as customers and clients. This policy is essential for companies in the construction, manufacturing, education, health care, hospitality and real estate industries.
Contractors Pollution Liability
CPL insurance is specific to contractors. This policy protects contracted workers from contamination resulting from their operations, such as the inadvertent disturbance of preexisting pollution or contamination, accidental use of contaminated soil, disturbance of asbestos and an interaction with lead paint.
Common Misconceptions of Environmental Liability Insurance
Misconception No. 1: General liability and property insurance policies cover pollution-related damage.
Companies often miscalculate their risk when assessing their need for environmental insurance policies and falsely assume general liability and property insurance policies will cover any risk exposures. General liability and property policies only cover ground and water pollution, but leave companies uninsured for damages and liability resulting from lead pollution, silica and dust exposure, Legionnaires’ disease, other bacteria, mold and viruses that could be present in a structure. Environmental liability insurance, however, covers risk beyond ground and water pollution.
Misconception No. 2: Only companies involved in environmental remediation or “dirty” projects need this type of insurance.
Even if your work is not related to the environment, your company is still at risk. For instance, a major research institution recently found asbestos while constructing its new science center, resulting in millions of dollars in removal costs. Without pollution liability insurance – one of the two major types of environmental liability policies – these damages and legal costs would have been out-of-pocket expenses for the institution. Companies that operate apartment buildings, hotels, hospitals and universities are specifically at risk and should be covered under this policy.
Misconception No. 3: It’s expensive, hard to get and difficult to understand.
As the market for environmental liability insurance products has grown, more companies have purchased them and their prices have subsequently dropped, which makes them more affordable. These products have also become more standardized over the last 20 years. They are offered by most major insurers and easily accessible to companies seeking coverage. Additionally, an insurance broker will be able to match your company’s specific needs to the right package. Environmental liability products can be tailored to the purchaser to be sure there are no unexpected gaps in coverage.