Environmental Liabilities After A Fire

environmental Strategist, between the lines: Follow-up to an article we sent out titled “Must Read For Insurance Professionals That Sell Commercial Fire Insurance Policies”.

In the article we highlighted how after a fire, the contaminated goo left by the fire department can create environmental liabilities for the insured to dispose of the contamination not to mention potential long term environmental liabilities on the insureds property and third party claims for bodily injury, property damage, business interruption, disposal costs, legal fees, investigation costs….

The article also pointed out how the fire department is immune from environmental liability and under Federal law the property owner is ultimately responsible for the environmental condition of their land regardless of who caused the contamination. So, bottom line is fires can create a huge E&O exposure for insurance professionals that sell fire insurance that do not strategize with insureds on potential environmental liabilities and how pollution insurance can fill in gaps in standard P&C coverages.

Environmental Risk Managers, Inc. (ERMI) recently received a submission from one of our Partner agencies for an insured that owns and operates a warehouse. The insured recently experienced a partial fire loss of just $180,000. The insured has an opportunity to land a large client but the potential client requires the warehouse to have pollution insurance should they experience an environmental liability with their operation while warehousing the clients products.

In marketing the submission to environmental insurance carriers ERMI received the following email from an underwriter:

“I am going to pass on this one due to the fire loss this past July. In order to reconsider I would need results of environmental assessment performed after the fire and a description of any remediation. And a detailed description of fire prevention and response loss control measures implemented since the loss.”

I share this because it supports the fact environmental underwriters understand and have experienced the environmental liabilities caused by fires. Also, fires create unscheduled expenses for the insured due to potential environmental liabilities.

This is just another example of why pollution liability insurance has become part of “Best Practices” for insurance professionals. As your environmental team member ERMI can assist you to make pollution liability insurance and risk management part of your daily business model to drive sales while reducing your E&O exposure.