Pollution Liability - clean up your certificates of insurance!

I swear this is true:

A friend of mine is an environmental engineer. His firm specializes in cleaning up contaminated land. Long ago his company worked with a prominent college. It seems their Physics department had the bad habit of tossing leftover radioactive material out the laboratory window where it ended up in a garden below. They did this for years (!) until someone decided it wasn't such a good idea and my friend was called in to clean up the stuff. They ended up removing hundreds of tons of soil and covering the area with two feet of concrete.

No more garden.

So, that's pretty extreme, among other things. But when's the last time you thought about pollution liability exposure? Remember, most commercial general liability (CGL) coverage explicitly excludes pollution, so think twice when setting up insurance requirements for any contractor or tenant working with or exposed to hazardous materials. Mold, ground contaminants, underground storage tanks or chemicals, such as those used by a dry cleaner, are leading causes of disastrous claims.

Pollution Liability coverage can get complicated – there are more than 20 carriers with 40 different products, all on unique company forms. Endorsements, definitions and exclusions vary and can be difficult even for insurance professionals to sort through. Adding to the issue is cost of coverage; it can get pricy and you may find tenants or contractors balking at the additional expense.

Although many policy types are offered as occurrence-based, it is common in pollution coverage to elect claims-made because evidence of a problem may take years to appear, long after the actual work performed is completed and forgotten.

For contractors working on your premises, the Contractor's Professional and Pollution Liability (CPPI) coverage fills in most of the gaps in the CGL policy. It includes Professional Liability, Protective Liability, Mitigation expense and Pollution Liability.

For tenants, be mindful of the nature of their activities. Are they storing or selling hazardous materials on the premises? What work is being performed? On top of insurance compliance verification, safety field audits for high risk operations should be considered.

We should expect, or at least hope, the days of tossing radioactive chemicals out the window are long gone. Clearly no one was minding the store. As a risk manager, you don't want to be remotely associated with the significant environmental liabilities that can accrue to property owners due to lack of forethought, attention to detail and appropriate risk assessment.

Besides, you want your garden to grow, not glow, right?