What is a Pollutant?
Any material, substance, liquid, product… 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 you?
Environmental Exposures Impacting Tribal Nations
Include, but are not limited to: Wastewater treatment plants/pumping stations exposures from nuisance odor claims, raw sewage rupture, chlorine gas emissions; Storm water runoff; Vapor intrusion; Sick building syndrome; Asbestos; Lead; Mold; Historical contamination from agriculture, mining, lagoons, landfills, manufacturing, scrap yards, old in ground tanks, surface impoundments, unknown/old landfills; Sewer lines; Maintenance garage services; Aboveground and/or underground storage tanks; Leaks from elevator hydraulic fluid storage tanks; Inadequate or no secondary containment for above ground storage tanks; Contamination from neighboring properties migrating onto your land; Storage and use of pesticides and herbicides; Petroleum waste products; Vehicle and equipment storage/parking over unsealed surfaces; Storage of Antifreeze, oil, Hydraulic Fluids….; Parks, lakes, rivers and open land (i.e. midnight dumping, discharge of raw sewage, asphalt paving projects with storm discharge to open waters, unknown surface conditions); Transfer and recycling facilities; Hosting household hazardous material collection days or other environmentally sensitive materials/chemicals; Landfills; Excavating through and spreading of unknown preexisting contaminated soil; Tenants using or storing environmentally sensitive materials, chemicals, waste….; Inadequate methane collection or venting; Leachate; Natural resource damages; Incinerators (i.e. airborne particulates, heavy metals (airborne and in residual ash, airborne volatile organic compounds); Spills/releases during loading/unloading process from trucks, rail road, barges, aircraft; Waste handling and disposal operations; No auditing of waste handling and disposal companies; Contamination from cemeteries; Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire; Brownfields; Animal waste management; Compost piles; Vandalism, sick building syndrome….
Note: The above list is intended only to outline some typical pollution exposures common to Tribal Nations it is not all-encompassing. If a Tribal Nations has schools, airports, hospitals, golf courses or other operations not outlined above contact environmental Risk Managers. (Phone 231-218-1041) for a list of common environmental exposures.
Environmental Loss Examples: Tribal Nations
- Chlorine release at a wastewater treatment plant resulted in toxic air emissions. Area residents and businesses were evacuated and several people were hospitalized for inhalation of fumes. Bodily injury claims amounted to $70,000.
- A dairy farmer was using treated waste water as a fertilizer in a land application process. He did not comply with permitting regulations nor did he have the wastewater tested prior to application. After several months of application, heavy metals and high counts of e-coli were found in the soils. The farmer was required to pay remediation costs in excess of $265,000.
- A park 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 municipal park. 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.
- The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils and required costly excavation and removal. The total cost for investigation, removal and disposal exceeded $320,000.
- A Tribal property was selected as the site for a new library. Construction was halted after the discovery of an unknown landfill location at the site. As a result of haphazard disposal techniques, there had been a wide array of materials disposed at this site. An investigation revealed that the landfill occupied about three acres and the refuse was approximately 20 feet deep. The cost to exhume all buried materials and sort them for proper disposal exceeded $1 million. Additionally, further investigation turned up soil contaminated with pesticides, total petroleum hydrocarbons and various volatile organic compounds. Soil investigations, cleanup and disposal amounted to approximately $500,000, bringing total costs to $1.5 million.
- A Tribal Nation had vacant land. When they visited the property to inspect it for a development project, they discovered that some waste had been illegally disposed of on the land. Testing of the waste showed it was a hazardous waste and the cost to the tribe to dispose of the waste was in excess of $300,000.
- A wastewater treatment plant pumping station had a faulty valve malfunctioned. As a result, a pipe ruptured releasing 1.5 million gallons of raw sewage into a local creek. Raw sewage traveled downstream to a larger river. The river was used by fisherman, boaters and marinas. Many boats were damaged by the sewage and marinas had to close while the waste was cleaned up. Property damage claims and loss of use of the waterway as a fishing source resulted in claims in excess of $700,000.
- An excavation/grading contractor unknowingly spread petroleum-contaminated soil across a project site during fill operations. The contractor did not have contractor’s pollution liability insurance and could not afford the cost to clean up the land. The property was owned by a tribe who had to expense $350,000 to clean up the land.
- When maintenance workers at a resort moved a pallet holding 300 gallons of muriatic acid, it fell and 150 gallons of the acid were spilled into the street. The acid — a pool chemical and potential lung irritant — ran down a gutter where it was stopped by firefighters. Fourteen people became ill after inhaling the fumes. Seven were treated at the scene and the others were sent to local hospitals. Later, several victims filed bodily injury claims against the resort.
Benefits of Environmental Liability Insurance
Consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy.
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 Liability Insurance Products
Environmental Impairment Liability (EIL)
EIL is for Tribal Nations 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. Sewer lines and pump/lift stations can be covered by EIL. Most EIL policies cover above ground storage tanks.
Property Transfer Coverage
When buying, selling or condemning property there can be unknown preexisting environmental conditions. Since a Phase I or Phase II survey 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
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. Note: An MCS-90 endorsement is not pollution coverage.
Underground and Above Group Storage Tanks
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.
Note: For Tribal Nations, you have potential indirect environmental exposures from the vendors you hire to perform services. Should your vendors cause an environmental problem or exacerbate an existing environmental issue their general liability insurance policy generally will have either an absolute or total pollution exclusion. In order to be protected you should make sure your vendors have the proper environment insurance coverage before they do any work on your behalf.
Contractors Pollution Liability
This coverage can be purchased to meet two specific exposures. First, contractors that perform remedial activities (asbestos, lead, mold, soil or ground water remediation) there is the standard contractor’s pollution liability (CPL) insurance coverage. This protects the insured for pollution conditions they may cause or exacerbate an existing situation while performing remedial services. This is for covered operations performed by or on behalf of the insured. The loss must occur away from any premises the insured owns, rents, leases or occupies, in other words while they are performing remedial services at an educational institution.
Secondly, standard contractors (i.e. general contractors, HVAC, plumbing, electrical, mechanical, janitorial, demolition, drilling, excavation, highway, street and paving contractors, rigging, utility, millwrights, artisan, etc.), in performing their services may cause an environmental liability that is generally excluded from their general liability coverage. For these contractors there is contingent contractor’s pollution liability (CCPL) coverage. Basically they are afforded the same coverage as remedial contractors but the cost to purchase this insurance is substantially less.
Professional Liability (E&O)
Should an environmental engineer/consultant or analytical laboratory make an error or an omission in performing professional services for you they will need an E&O policy including pollution for there to be coverage. Some professional services could include Phase I or Phase II site assessments, All Appropriate Inquiry (AAI), air monitoring, lead and asbestos assessments, waste characterization, remedial action plans, water testing, mold survey’s, environmental training….