No Business Is Safe from Environmental Disaster
Protect Your Assets and Future with Pollution Liability Insurance
(ARA) - Fears that the environment will suffer under the Republican administration are misplaced, say the worldīs leading pollution liability experts. Thanks to privatization and the shift to state enforcement, pollution is being rapidly uncovered. Good news for Mother Nature -- devastating news for those footing the clean-up bill.
The fact is, nearly every business -- from farms and schools, to contractors and developers, to printers and manufacturers--is a potential polluter facing third-party liability claims, clean-up costs, business interruption, and damaging publicity. Thatīs according to the environmental insurance experts at Assurex International, the worldīs largest privately held risk management and commercial insurance brokerage group.
Ironically, business owners who devote considerable resources building healthy organizations often risk it all by neglecting pollution liability insurance coverage. They mistakenly believe their companies are free of environmental exposures, or that pollution coverage is unavailable or unaffordable. Both assumptions are false and potentially costly to businesses large and small.
Former and current land and business owners, waste generators and transporters all can be held liable for environmental exposures. "Acquire a company that buried tanks 15 years ago, construct homes on arsenic-laced farmland, build a school on toxic land, and youīll share liability with the polluter--unless you have environmental liability insurance," notes Assurex President and CEO Thomas W. Harvey.
Environmental insurance helps offset costs associated with pollution clean-up, business interruption, lawsuits, construction delays and property value diminution. "Environmental insurance can mean the difference between business survival and devastating financial loss," says Harvey.
You donīt have to be a chemical manufacturer or other big operation to be at risk of environmental liability. Businesses large and small are potential polluters. For a small, neighborhood grocery store, just one broken bottle of ammonia could release fumes, overcome shoppers, and create potential liability problems.
On a somewhat larger scale, take the case of the entrepreneur who bought an aging fast-food restaurant. While remodeling, the new owner discovered underground storage tanks buried 20 years earlier when a gas station sat on the site. The new and previous owners shared responsibility for removing the tanks at a cost of $20,000 to $1 million-plus. With an environmental liability insurance policy in place, clean-up costs might be covered.
Large organizations experience environmental surprises, too. When construction began on a $200 million school complex in Los Angeles, officials had no idea their state-of-the-art learning center sat on toxic land. Once environmental contamination was uncovered, construction on the nearly complete building stopped. Had a site survey been conducted prior to construction, this costly disaster might have been avoided.
While a site survey should be part of any merger, acquisition or real estate transaction, surveys sometimes fail to unearth exposures. Environmental insurance, on the other hand, is a certain way to transfer risks and mitigate financial losses.
According to Brad Maurer, an environmental insurance expert with New York City-based Assurex Partner Frenkel & Co., most business executives would be surprised to learn whatīs covered by an environmental insurance policy. "Insurance can cover existing exposures today, as well as future risks. Even known environmental conditions may be covered, if surveys indicate there is no immediate health threat," notes Maurer.
"Environmental insurance policies are becoming popular tools for real estate and business transactions," adds Maurer. "Environmental insurance allows buyers and sellers to transfer a dealīs environmental risk to an insurer, rather than wasting time and money negotiating who will bear and fund the
risk."
The Assurex environmental risk management experts identify six pollution-related losses typically covered by insurance:
- Defense costs incurred when a third party files a lawsuit against the insured.
- Defense costs related to government-mandated clean-up.
- Internal business expenses, including business interruption costs related to clean-up.
- Development delays when chemical drums or other environmental conditions are discovered on construction sites.
- Property value diminution.
- In addition, banks and other lenders may purchase insurance to pay off property loans after environmental conditions are discovered.
The pollution liability experts at Assurex offer tips to help business and land owners avoid environmental disaster:
- Consult with an experienced insurance broker familiar with the environmental risks facing your company and industry. A pollution liability expert will know what coverages exist, which insurers will underwrite your risk, and how to negotiate the best coverage at the most attractive cost. The benefit of consulting a knowledgeable professional is demonstrated by the experience one Assurex Partner had with a major food wholesale client. A food industry specialist, the broker contacted an underwriter who was equally knowledgeable of the clientīs risks. Because the Assurex Partner/underwriter team recognized ammonia as a common refrigerant and potential polluter, the wholesaler was covered when an ammonia cloud from the plant closed one of the East Coastīs largest bridges, sending toll workers to the hospital and commuters to alternate routes.
- Donīt let an environmental crisis blind-side you. Do the necessary due diligence, and look deeply into the past of any business or property you plan to buy. Before purchasing property, always hire an engineer to conduct a Phase 1 Environmental Assessment. Had residential developers surveyed the notorious Love Canal before constructing homes and a school on the site, children, teachers, and parents would not have been exposed to this deadly cancer cluster.
- Transfer your risk with environmental liability insurance. Quotes are free and coverage is broader and more affordable than ever. Environmental insurance offers an economic way to address uncertainty. The property that looks like a tranquil pasture today might once have been the site of toxic dumping. Current owners, former owners, waste generators, and transporters can all be held liable, retroactively to the 1920s. Environmental insurance offers peace of mind by transferring risk and liability away from you to the insurance company.
- Donīt let an inexperienced insurance agent practice on your company. Environmental exposures and insurance coverages are complex. A novice, unaware of available pollution endorsements, might not realize that a pollution liability policy alone does not always offer adequate coverage.
For additional information about Assurex International, visit
www.assurex.com.
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