What is Pollution Liability Insurance?

Almost any business may be accused by a customer, nearby resident, business, government, nonprofit, or regulatory agency of polluting the environment. Up until the 1970s, most business owners policies included coverage from pollution-related lawsuits that were filed against businesses. Since the outbreak of asbestos claims in the 70s, though, businesses generally have had to purchase separate pollution liability insurance to protect themselves from these potential suits.

Pollution liability insurance is a specialized form of liability coverage that helps businesses manage pollution cleanup costs and defend themselves against liability claims related to pollution. Most policies provide protection for claims related to small-scale contamination of groundwater, soil, or air. (Businesses that need coverage for potential large-scale contamination might be better off with environmental impact liability insurance.)

What Businesses Can Benefit from Pollution Insurance?

Any New Jersey business that uses chemicals or materials may want pollution insurance. Not only should businesses that work with materials that are known to be harmful consider purchasing coverage, but even those that use chemicals or materials thought to be safe might want a policy. For, chemicals and materials that are thought to be safe may be shown to be dangerous in the future -- and any company using them might be sued.

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The list of businesses that use chemicals and materials extends well beyond manufacturers with large factories. Other businesses that might benefit from having a policy include:

  • Contractors, as building materials used today may be found to be harmful in the future
  • Landscapers, as they use pesticides, herbicides, and fertilizers that can leech beyond the plants they treat
  • Pool service companies, as the chemicals they use could contaminate nearby land or water
  • Automotive repair centers, as they regularly work with oil and other harmful chemicals
  • Dry cleaners, as they also use potentially dangerous chemicals on a daily basis 

Protect Your Business

What Coverages Does Pollution Insurance Provide?

The coverages included in pollution insurance policies can often be tailored to a particular business’ specific needs. Some of the coverages that a policy might offer are:

  • Coverage for legally mandated cleanups of contaminants that have leeched into the environment
  • Coverage for environmental contamination that occurs during a business’ normal operations
  • Coverage for cleaning up transferred property that was contaminated by a previous owner
  • Coverage for lawsuits and settlements arising from covered incidents

Companies that provide environmental consultation or cleanup services may their pollution policy to also include errors and omissions coverage. Errors and omissions coverage might provide protection if a business makes a mistake in its work.

Many policies also offer coverage for harmful chemicals and materials that were used in the past before their effects were known.

What Factors Affect Pollution Policy Premiums?

Insurers, of course, consider a number of factors when calculating pollution policy premiums. A few of the items they take into account are:

  • What industry a business is in
  • What chemicals and materials a business uses
  • How a business disposes of any hazardous waste
  • How close a business is to neighborhoods

Make Sure You Have the Right Coverage

How Can Businesses Get Pollution Liability Insurance?

Businesses that would like to learn more about pollution liability insurance should contact an independent agent near them. An independent agent who specializes in commercial insurance can help a business request quotes from different insurers and select a policy that meets the business’ needs. An agent can also answer any questions about pollution insurance and how it can help protect a business. 

Meet Your Industry Specialist

Ed Wargins

Mr. Wargins is a Partner at World Insurance Associates LLC, and joined the team from E&S Insurance Agency, Inc. (E&S), where he was the President and founder of the agency. Ed has 17 years of experience as an insurance producer and agency owner.

Prior to founding E&S in 2005, Mr. Wargins was a producer at HUB International from 2002 until 2005. In 2002, HUB acquired his employer, C.S. Nenner, Inc.

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