The risk of pollution may seem obscure, but it is one that could arise at any time. New forms of pollution and contamination are frequently being discovered, often with the result of a large (and generally successful) lawsuit due to third-party bodily injury or property damage.
In addition, due to the widely variable and uncertain nature of environmental and pollution factors, this risk is an economically uncertain liability – but one that could be financially disastrous. Costs could exceed even the value of the property itself. Many risk managers feel more comfortable paying a fixed amount in premium for a pollution policy than gambling with potentially catastrophic costs in the future.
Potential costs are so high because there are many aspects to pollution exposures. For instance, a third-party claim could include bodily injury, property damage and/or hefty cleanup costs, both for contaminants that travelled off-site or were released onsite. Plus, the company would be responsible for the court costs associated with defending itself. A first-party situation arises when a company experiences a spill or contamination situation that that requires cleanup, often due to a violation of local, provincial or federal environmental standards. In both of these instances, business interruption is also a consideration, as any cleanup could be time-consuming as well. A pollution policy can cover all of those exposures.
In addition, a pollution policy can help a property transaction go quicker. If an environmental condition exists prior to or during the sale of a property, the process can be dragged out while the condition is cleaned up. Even if no known condition exists, environmental tests and investigations to find potential pollution sources can be lengthy. A pollution policy can help the sale move because the buyer knows an existing environmental condition would be taken care of, without needing to hold off the sale until that point.
A pollution policy can be flexible, making it easier for you to tailor the coverage to fit your company’s particular exposures. Contact an ALIGNED Advocate today to start structuring a pollution policy to fit your company’s needs.