Pollution Liability Insurance and Possible Negligence

A common misconception among many business owners when it comes to the pollution liability insurance is that the substance polluting has to be a major oil spill or corrosive chemical of some kind. But this is not necessarily the case. Even companies such as dry cleaners, hair salons, or any business that uses chemicals of some type are typically at risk of pollution liabilities when they store or dispose of their various chemicals.


What’s more, the issue of pollution liability has come to the forefront with growing concerns over the safety of drinking water, chemicals and toxins harming marine life,

the degradation of underground water resources across the U.S., and poor fuel quality, to name a few. In addition, the long-term, ill effects of environmental pollution on the public welfare, the environment, and natural resources is a top-of-mind issue after several well-publicized environmental disaster, the enactment of federal environmental legislation in response to those disasters, and inevitable litigation over financial responsibility for the cleanup and damages resulting from environmental pollution.


Negligence is a major concern


If a company is found to be at fault for the failure to do what is reasonable, under the circumstances, to protect third parties from injury or damage, it can be found guilty of negligence which can result not only in lawsuits but also fines and penalties. Take a look at an example of a negligent act that resulted in an actual environmental liability claim. A hazardous waste hauler transporting toxic waste to a disposal facility had an auto accident in the downtown section of a city. The hazardous liquid being transported was released into the street. Passersby inhaled the fumes, and the business district of the city was evacuated for two days as cleanup contractors responded to the spill. Claims were filed against the transporter alleging bodily injury, property damage, and business interruption. Fines and penalties were also issued. Without the appropriate insurance coverages, including Pollution Liability, the costs involved to make the appropriate indemnification would be prohibitive.


You may think that your business is too small to worry about pollution insurance, but in fact businesses most commonly at risk are in the contracting, manufacturing, and transportation industries. Many other types of firms may also be affected, for example, small businesses like landscapers and restaurants. Discuss the need for pollution liability coverage with your insurance agent to determine what type of policy you need.