As an environmental insurance wholesaler, Environmental Risk Managers, Inc. (ERMI) regularly fields calls from retail agents who went direct to an environmental insurance carrier for an indication, they are not familiar with coverage and could we offer some insight.
In a recent conversation with an agent, I mentioned there were some coverages not being offered in the indication and when I pointed out Natural Resource Damages was not being covered, the agent asked what Natural Resource Damages were and was that an important coverage?
My initial thought is that this is exactly why specialty environmental insurance wholesalers like ERMI exist and fortunate we were able to assist our now, new agent to avoid potential E&O exposure.
This is also a good coaching moment on why it’s critical for businesses to have an environmental financial assurance plan to address Natural Resource Damages.
What are Natural Resources? The EPA (https://www.epa.gov/superfund/natural-resource-damages-frequently-asked-questions#1) states “Under both the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Oil Pollution Act (OPA), there are two parts to the “natural resources” definition. First, natural resources are defined broadly to include land, fish, wildlife, biota, air, water, groundwater, drinking water supplies and other such resources. Second, the resource must belong to, be managed by, held in trust by, appertain to or otherwise be controlled by the United States, any State, an Indian Tribe, a local government or a foreign government [CERCLA §101(16); OPA §1001(20)].”
What are Natural Resource Damages? The EPA states “Damages are defined as injury to, destruction of, or loss of natural resources [CERCLA §§101(6); 107(a)(4)(C); 111(b); OPA §§1001(5); 1002(b)(2)]. The measure of damages under CERCLA and OPA is the cost of restoring injured natural resources to their baseline condition, compensation for the interim loss of injured resources pending recovery, and the reasonable costs of a damage assessment [CERCLA §§107(a)(4)(C); 107(f)(1); OPA §§1001(5); 1002(b)(2); 43 CFR §11.15; 15 CFR §990.62].”
Apart from living in Vail, Co. for two years after college, I have been a lifelong resident of Michigan, “Water, Winter Wonderland”. In Michigan, you are never more than six miles from a body of water, roughly 50% of the Upper Peninsula is government or tribal owned land…, as a Michigander, you understand why environmental financial assurance for Natural Resources Damages is critical. What Natural Resources could your client’s impact should they have a pollution liability? Pollution liabilities tend to be a severity versus frequency issues and Natural Resource Damages is a great example.
What is your environmental financial assurance strategy to address Natural Resource Damages?
Natural Resource Damages examples:
What about Natural Resource Damages from Cyberattacks? As a general rule, cyber policies do not cover for pollution losses that result due to a cyberattack: https://www.scic.com/do-your-clients-need-pollution-liability-coverage-for-cyberattacks/
The Trump Organization was accused of taking almost 20 million gallons of river water per day to cool their Chicago skyscraper, then pushing warm water back into the river without a permit breaking rules meant to protect fish and wildlife: https://www.costar.com/article/1919798340/trump-tower-insurers-off-the-hook-in-chicago-river-pollution-lawsuit
Dam owner guilty in field turf pollution of Washington river. A bypass was used to divert a river allowing construction work on a dam. The bypass failed and allowed black rubber particles from recycled tires into the river: https://mynorthwest.com/3845252/dam-owner-guilty-in-field-turf-pollution-of-washington-river-2/
Click on the link for more on becoming a Certified environmental Strategist (CeS), offered through The National Alliance: https://www.scic.com/certified-environmental-strategist/