What is a pollutant: Any material, substance, liquid, product, etc… which is introduced into an environment for other than its intended use / purpose. Fresh water, cheese and milk have all been classified as pollutants by Insurance Carriers under various circumstances. What pollutants are impacting your business?
Common environmental exposures encountered with hunting and fishing clubs/outfitters include, but are not limited to: Natural resource damages; Pollution cleanup and liabilities that result after a fire is put out; Use of herbicides, pesticides (Glyphosate), fertilizers…: Storm water runoff; Historical pollution from mining, landfills, manufacturing, government facilities, agriculture, scrap yards, old equipment bone yards; Lead contamination at shooting range impacting soil and groundwater; Illegal disposal of waste; Improper treatment and/or disposal of sanitary wastewater facilities; Fuel spills from recreational equipment; Underground or above ground storage tank leaks causing water and soil contamination; Abandoned underground storage tanks especially those of which the site owner is unaware or those which have been improperly closed; Lead paint; Asbestos; Fueling boats in the water; No auditing of waste handling and disposal companies; Improper management of protected or sensitive areas such as wetlands; Siltation of nearby streams, rivers, or lakes; Improper erosion control management; Electrical equipment containing toxic PCBS; Old, abandoned wells which are not properly closed and serve as an open conduit for groundwater contamination; Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire; Old septic systems; Pressurized gas cylinders; Spills from loading and unloading of raw materials; Pollution from neighboring properties migrating onto yours; Easements that cross the property which may leak or spill hazardous materials; Residual contamination such as fertilizers or pesticides from past farming or similar uses; Previous spills of hazardous materials from adjacent roads or railways due to truck or train accidents; Corroded wastewater and storm water sewers; Improper purging of bilge waters from marine vessels; spills and air emission from power generators; Mold / legionella….
Sportsman Clubs Environmental Loss Examples
- A Hunting Club in a remote area, the owner discovered several piles of unidentified waste that had been dumped on the property. The Club had the piles tested, at a cost of several thousand dollars. The piles contained hazardous waste. The Club owner’s cost to dispose of the waste was estimated to exceed $200,000.
- Clean Property; Phase I and Phase II environmental assessments involve limited sampling of a property and cannot guarantee that the property is clean. For example, a hunting/fishing business, acquired property previously used for farming. An environmental consultant was hired to conduct a Phase I Environmental Assessment. The property was determined to be “clean.” However, during excavation for a building, 100 drums of buried pesticides and herbicides were unearthed. The chemicals contaminated the soil and had to be removed. Remediation and drum disposal costs exceeded $450,000
- A hunting / fishing business in their maintenance garage changed the oil for its equipment over a drain leading to an on-site septic system. Over a period of many years the oil breached the septic field and migrated to neighboring properties. When contamination was discovered in a nearby well investigations determined the contamination was coming from the hunting / fishing septic field. Site remediation and installation of a groundwater recovery system exceeded $6000,000.
- Upstream from a fishing lodge served as a convenient illegal disposal site for a recycling contractor. The contractor dumped five 55-gallon drums, releasing 275 gallons of used mineral spirits into the stream. When the drums were dumped, the hazardous contents leaked into the soil. In addition, the contractor emptied the contents of the vacuum truck into a nearby community lake. Total cleanup expenses amounted to $475,000.
- A fishing camp operated its own on-site wastewater treatment facility. Seals on the bottom of the treatment system leaked and wastewater overflowed from the top of the system. This caused numerous discharges of contaminated effluent to enter the soil and migrate into the nearby lake. The EPA cited the fishing camp for various discharge violations and issued an administrative order finding the fishing camp responsible for contamination of the adjacent properties. Government mandated cleanup costs exceeded $250,000. In addition, neighboring property owners filed claims against the fishing camp for property damage, business interruption and trespass of pollutants. The combined total of the civil suits exceeded $500,000.
- A fishing camp stored fuel for their boats in an above ground 5,000-gallon storage tank. The tanks secondary containment was cracked and a leak from the storage tank breached the secondary containment allowing more than 1,000 gallons of fuel to be released into the environment. Cost for remediation exceeded $250,000.
- A sportsman club had to pay for remediation and supply potable water to residents when it was determined that lead from their shooting range via stormwater runoff had leached into the groundwater over a period of many years. Remediation and third-party claims for bodily injury exceeded $1,000,000.
- A hunting and fishing guide service, during the summer season, had several customers complain of headaches and nausea. Investigation revealed several sleeping cabins had water leaks from several sources (plumbing, open windows during storms…) that allowed for mold to develop. Cost to remedy the issue exceeded $75,000.
- A hunting club had a fire at their main lodge. Once the fire department put out the fire thousands of gallons of contaminated residue from the fire entered the lake on which the club was located. Natural resource damages and cost to remediate the land exceeded $200,000.
ENVIRONMENTAL LIABILITY INSURANCE BENEFITS
Sportsman’s clubs generally lack the financial strength to self-insure their environmental liabilities. Since every commercial contractor is impacted by environmental liabilities consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy versus self-insurance.
The Three Main Benefits environmental liability insurance offers:
- Defense Costs: Environmental liabilities are relatively new and very litigious. Even if you do nothing wrong you can still get named in a suit and have to expense defense costs i.e. legal fees, environmental investigations, etc.
- Claim Management: All policies come with specialists to assist you in handling a claim. Who is in charge of communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
- Third Party Liability: The majority of the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption. You need to look at your client’s and neighbors that can be impacted if you or a sub-contractor/vendor cause an environmental loss.
Environmental Risk Transfer Products
Environmental Impairment Liability (EIL)
EIL is for hunting and fishing businesses susceptible to economic loss caused by pollution that actually or allegedly originated from their operations. Sometimes referred to as pollution legal liability this coverage is for those who own, operate, lease, or have any other insurable interest in real property and the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions. Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site cleanup costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multi year terms. Most EIL policies cover above ground storage tanks.
Property Transfer Coverage
When buying or selling property there can be unknown preexisting environmental conditions. Since a Phase I, Phase II… site assessments cannot guarantee uncovering all potential environmental liabilities, insurance companies have created property transfer insurance. This coverage protects the new owner or any party with an insurable interest, against unknown environmental conditions that may be discovered during the policy period, that were not caused by the new owner. This coverage not only helps to keep the property at its maximum value, it will assist the purchaser in being able to secure the necessary financing to complete their transaction.
Transportation Pollution Liability (TPL)
Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of their cargo. Transportation pollution liability affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo.
Underground and Above Ground Storage Tanks (UST, AST)
Financial responsibility requirements ensure that owners and operators of underground storage tank systems can financially handle a release from an underground storage tank. The responsibility encompasses the ability to pay funds for corrective action and third-party bodily injury and property damage from non-sudden and sudden and accidental releases from a regulated underground system.
Vendor Insurance Coverages
If you hire contracting services i.e. mechanical / equipment repair, general construction, HVAC, plumbing, electrical, roofing…, landscaping, herbicide & pesticide application…, pool maintenance… you should confirm the vendor has contractors pollution liability coverage.
Contractors Pollution Liability (CPL)
Contractors Pollution Liability (CPL) insurance protects the insured should they cause or exacerbate an environmental condition while performing their contractor services. CPL protects the insured for covered operations performed by or on behalf of the insured, while operating away from any premises they own, rent, lease or occupy.
CPL can be offered on a claims made or occurrence basis. Coverage can be written on a job specific basis, owner controlled or blanket basis to cover all the work performed by the insured. Most policies can be endorsed to cover transportation pollution liability, mold, lead, and asbestos, defense outside the limits, off-site disposal coverage, and more.
If the vendor is a transporter refer to transportation pollution liability above.