Sudden and Accidental Pollution Insurance:  Is your janitorial company protected?

Commercial janitorial companies and residential cleaning companies face many insurance and accident risks because of the nature of their business and products used to clean, disinfect, and sanitize the premises or objects at the site, where employees are working. The products used and their residue can qualify, and usually do, as pollutants and or waste and fall under the pollution exclusions language contained in almost all Commercial General Liability policies.

It is essential to the financial survival of any cleaning company to have coverage for pollution discharge related accidents regardless of whether they are categorized as sudden and accidental or long term discharge.  This distinction formerly spawned countless lawsuits and made coverage uncertain.

Since 1973, when the first Pollution Exclusion came into being the insurance industry has struggled with exactly how to deal with this issue. The first exclusion basically focused on whether the pollution discharges were sudden and accidental to determine if the occurrence was an excluded discharge, the discharge was often excluded and the insured was not covered. Court cased determining this issue did not agree on the interpretation of this clause “sudden and accidental” and as a result there was no consistency in the case law throughout the country.  This void continues to exist even after 50 years of litigation.

Numerous Insurance Service Organization (ISO) endorsements have been introduced, since 1973  to try to clarify the exclusion including the absolute exclusion and the total pollution exclusion but the inconsistencies in coverage remain according to the law of the state and interpretation of that particulate state court’s ruling on the subject. The Elusive “Pollution” Definition in the CGL Policy.

Presently the pollution liability is excluded in two places, First, the insureds are usually excluded under CG 00 01 exclusion section of the Commercial General Liability policy and/or the Total Pollution Exclusion CG 21 49.  This makes is abundantly clear that  pollution liability is excluded under a Commercial General Liability policy.

Thus it would seem very foolhardy to rely on any type of pollution liability coverage under your Commercial General Liability policy to cover a pollution discharge of any kind; if you operate a residential or commercial janitorial operation.

The alternative is to obtain certain sure coverage with a different type of policy in addition to you Commercial General Liability policy. This can be in the form of an endorsement or an addition to you policy, or can be purchased as a stand alone policy.

Some of the alternative policies that are available are a specific contractor’s pollution liability insurance policy or a pollution liability policy which is obtainable as either long term pollution or sudden and accidental pollution.  You will need to determine which type of pollution discharge insurance fits your needs.

Generally speaking sudden and accidental would apply for example in an instance where a fire occurs spontaneously due to a spillage and would be the most frequent type to occur.  On the other hand if you clean out industrial kitchen waste resulting in grease and sludge accruing in a drain and causing noxious fumes to emanate or backups to occur which result in flooding. So you may need long term pollution insurance instead, or both.

There are then many questions that arise depending on which type of insurance you select.

• Do you need claims made coverage or full coverage?
• Is there coverage for prior acts, if so how far back will the retroactive date go and will you have extended reporting periods?
• You need to investigate how high your damages could go in case of an accident to determine what aggregate limits you might need.

Pollution liability can cover:

• the costs, fees and attorneys fees in case of a claim
• testing, monitoring, cleaning up the polluted site
• fines for noncompliance with governmental regulations
• physical bodily injury
• property damage, restoration and replacement
• as well as bodily injury

 

Pollution Liability protects your business from accidents relate to the discharge, dispersal or release of:

• Smoke and vapors
• Soot and fumes
• Acids and Alkalis
• Toxic chemicals
• Liquids or gasses
• Waste material
• Other irritant’s or contaminants

So take the opportunity to review your policy and conduct a risk analysis review with your agent, broker or carrier.