If your company doesn’t tear down old buildings, transport oil or gas, or produce toxic chemicals, you may assume you’re safe from pollution-related claims or lawsuits. However, the term “pollutant” is broader than you may think—which means there’s a good chance your business uses polluting materials in some capacity.
To understand why you might need pollution insurance, you first need to know what it is, how it works, and why it’s important. Keep reading to learn the basics of this lesser-known yet essential insurance coverage.
What Is Pollution Liability Insurance?
Pollution liability insurance, or environmental insurance, helps your business pay for losses or damages if you unintentionally release pollutants into the environment. While many pollution claims are related to harmful or toxic materials like oil, asbestos, and mold, the definition of “pollutant” can extend to any substance causing damage after being used or released somewhere it doesn’t belong.
What Does a Pollution Insurance Policy Cover?
You need a policy if you own a business that relies on commercial vehicles. Employees who drive for work-related assignments like sales calls or product delivery need coverage for personal injury protection. Self-employed or sole proprietors may require additional research to determine whether commercial or personal auto insurance suits their needs.
If you’re a sole proprietor unsure if a commercial or personal policy is the most beneficial, contact an insurance company and learn more about their offerings. Explain to the agent that you’re a business owner and describe how you plan to use the vehicle for business.
Before reaching out for guidance, consider:
- Vehicle type and weight
- What your current plan offers
- How you use the vehicle for business, and how often
- The amount of coverage you need based on business activity
Types of Pollution Insurance Coverage
A standard pollution insurance policy may be adequate to protect your business, but you can also choose from several specialized coverages that address specific risks.
Site Pollution Coverage
Site or premises pollution liability insurance applies to specific locations, such as warehouses, waste management facilities, and schools. If you purchase a building containing hazardous construction materials or use pollutants on the premises, this policy can help protect your risks.
Contractors’ Pollution Liability (CPL) Insurance
CPL policies cover risks unique to contractors that work with hazardous materials, and construction companies can purchase coverage on a per-project or blanket basis.
Storage Tank Pollution
If you store hazardous materials in above- or underground storage tanks, you can also purchase a standalone storage tank pollution policy for an extra layer of protection.
Why Is Pollution Insurance Important?
If you already have existing commercial general liability and property insurance policies, you may be wondering why you need even more coverage. The answer is simple: general liability and property policies exclude most, if not all, pollution-related claims. Without a separate pollution policy, you wouldn’t have any coverage for expensive bodily injury or property damage claims, legal fees, or cleanup costs. Depending on the loss event and the extent of pollution, this coverage gap could leave you with a six- or seven-figure bill and no financial support.
According to the National Association of Insurance Commissioners, pollution claims have been increasing in the past few years, and many businesses are unaware that their current business insurance contains pollution exclusions. As a result, it’s crucial for companies with environmental risks to take stock of their current coverage and purchase a pollution policy before they suffer from an uncovered claim.
Who Needs Pollution Insurance Coverage?
Any company that works with pollutants—knowingly or unknowingly—can benefit from pollution insurance. If you own a business in one of the following industries, you most likely need coverage:
- Auto repair
- Waste management
- Oil and gas
- Real estate
Commercial building owners in any industry should also consider pollution liability insurance in case their site contains hazardous materials like lead, asbestos, or contaminated soil.
Even businesses without an apparent pollution exposure may need pollution insurance. While a claim may seem unlikely, you never know when an employee may encounter a polluting material or accidentally use a hazardous substance in the wrong capacity. Your insurance agency can help you determine your level of risk and recommend policy options to protect your business from unexpected claims.
InSource Insurance Group specializes in pollution insurance for the oil and gas industry. Discover how we can help protect your business with policy options from the most reputable carriers.
Explore Your Pollution Insurance Options With InSource
Determining whether or not you need pollution insurance isn’t easy, and sometimes, there isn’t an obvious answer. That’s where InSource comes in. Our experts can assess your risk level and determine what you need to address coverage gaps.
Our experts specialize in finding niche insurance coverages for some of the riskiest industries, including oil and gas, manufacturing, and construction. As a risk management agency, we know how to assess your current and future risks, cover them with affordable insurance, and mitigate hazards to reduce the likelihood of a pollution claim.
Whether you need pollution coverage for one project or policies for several sites and storage tanks, our team will work with the most experienced pollution insurers to ensure you get the financial support you need during a loss event. Contact our team today to schedule a consultation or request a quote from one of our carrier partners.