Environmental liability insurance is an important tool for businesses that are into substances or take part in practices that could undoubtedly damage or hurt the environment. This insurance type is mapped out to offer protection to companies against the financial liabilities related to damage to the environment.
For instance, soil, air, and water contamination, as well as other harmful events or situations. What’s more, this insurance offers protection against legal expenses, costs of cleanup, and damage to another party as a result of environmental accidents.
What Is Environmental Liability Insurance?
Environmental liability insurance is also known as environmental impairment liability insurance or pollution insurance. It is a special type of insurance that manages and covers the gaps that are not usually covered by general liability insurance quotes.
This insurance assists businesses in handling the risks related to the cleanup needed by state or federal regulations as well as environmental pollution.
How Does It Work?
Meanwhile, this insurance operates by offering coverage for claims that come from pollution-related events. These situations can be objections to environmental laws, accidental spills, or heedless releases of pollutants.
Thus, when you file a claim, the insurance company covers the costs of clean-up, legal defense, investigation, and any civil fines related to the claim. Quotes can be customized to cover certain business risks and activities, depending on the nature of the business operations.
What Does Environmental Liability Insurance Cover?
Here is what environmental liability policy typically covers:
- Business interruption.
- Cleanup costs.
- Third-party claims.
- Environmental civil fines and penalties.
- Non-owned disposal site liability.
- Transportation.
- Loss of income and extra expenses.
- Legal defense costs.
- Personal liability.
- Environmental damage.
- Changes in environmental rules.
Wide pollution conditions, sudden and accidental, gradual, asbestos releases.
What Does It Not Cover?
Here are situations where you will not be getting coverage with an environmental liability policy:
- Fines and penalties.
- Intentional noncompliance.
- Contractual liabilities.
- Known pre-existing conditions.
Who Needs a Policy?
Here is a list of types of businesses or individuals that usually need environmental liability coverage:
- Recycling facilities.
- Gas stations and automotive service stations.
- Laboratories.
- Storage facilities that handle hazardous substances.
- Mining companies.
- Manufacturing companies.
- Chemical producers.
- Waste treatment and disposal facilities.
- Transportation companies that handle hazardous materials.
- Ports and maritime operations.
- Hospitals and medical facilities.
- Real estate developers.
- Energy companies involved in gas, coal, and oil.
- Landscapers and pest control services.
- Dry cleaners.
- Property management firms.
- Construction companies.
- Paint and solvent manufacturers and users.
- Agricultural businesses.
And any business close to sensitive environmental areas.
How Much Does it Cost?
The average cost of an environmental liability policy starts from $2,500, depending on the insurance company. However, other factors affect the price of purchasing a policy, and they include:
- Geographic location.
- Claim history.
- Deductibles.
- Business industry.
- Policy limits.
- Business size.
Hence, when your premium is being calculated by the insurance company, all of these factors will be considered.
How To Get Environmental Liability Insurance
For businesses that know that their businesses may be a threat to the environment, it is advisable to purchase an environmental liability insurance policy. However, if you are unsure of the procedure, this section will guide you throughout the process:
- Assess your environmental risks and potential hazards.
- Understand the coverage requirements.
- Consult with an insurance broker.
- Compare insurance companies and quotes.
- Review policy conditions and terms.
- Choose a policy.
- Apply.
- Customize your policy.
- Pay premium.
- Review regularly.
- Maintain best practices and compliance.
By following these steps, you will be able to successfully purchase an environmental liability insurance quote and get an adequate amount of coverage.
FAQs
Can environmental liability insurance cover mold and asbestos?
Yes, many quotes can be offered to cover mold and asbestos. However, this coverage may not be added by default and may need an extra premium.
Is environmental liability insurance required by law?
It is not mandatorily needed by law, but specific businesses may need to have this insurance type depending on the industry regulations or state laws.
What triggers an environmental liability policy?
What usually triggers this insurance quote is coverage for environmental pollution or damage that takes place during the policy period. Contamination scenarios, accidental spills, or leaks are also included.
Is environmental liability insurance the same as general liability insurance?
No, environmental liability coverage is designed specifically to cover claims associated with environmental pollution and damage, which are usually not covered by general liability quotes.
How long does coverage last under an environmental liability insurance policy?
Insurance quotes can differ. Some are provided on a claims-made basis. In other words, they cover claims during the policy period only. On the other hand, others may provide coverage on an occurrence basis. Therefore, events that take place during the policy period, no matter when the claim is filed, are covered.