Water Pollution Insurance

An ominous exclusion to commercial general liability insurance

Water is essential to life and no human can survive without it. However, Water Pollution abounds making clean water a rare commodity throughout the world although America is considered a water rich country compared to many other countries. Unfortunately, stewardship of this precious resource has not always been successful in the United States. Even though knowledge is gained exponentially as more research is conducted, more people become aware of the issue and more efforts are aimed at protecting water. Yet Water Pollution still occurs every day in the business world. This is not an exaggeration.

Water Pollution is not limited to major industry and manufacturing.

Even SMB’s have wastes that eventually reach the water. Beauty shops use chemicals dyes and bleaches which end up in the sewer system. Day cares use diapers, bleach, wipes and pharmaceuticals. Schools use bleaches, pesticides and cleaning products, Family farmers, as well as farming conglomerates, use fertilizer, feed, herbicides and pesticide. Farm animals give off waste which result in methane and pollutants in the water. Auto repairs, lawn mowing, painting all use products with pollutants which seep into our land and waters. Additional pollution comes from bacteria in the water. The list goes on and on. Essentially “…water and air have become global garbage cans” Jacques Yves Cousteau.

Water Pollution along a beach.

Water Pollution Insurance coverage is a critically necessary to protect many businesses from liability and loss of their assets.

Water Pollution is a form of environmental pollution, which is often excluded from commercial general liability insurance in present day. Prior to 1980, comprehensive general liability did include environmental pollution liability in some states. It is entirely possible to have a claim brought for environmental pollution and find that an older general liability policies may still cover the event where the pollution has been ongoing over a lengthy period of time. (This is a very complex issue under insurance law which is beyond the scope of this article and consultation with a qualified attorney is advisable if you find yourself embroiled in a lawsuit or you have been notified of a claim).

Businesses and government usually want to protect their employees, their clients, their community and ultimately the end consumers of water. But businesses, local governments and the federal government make mistakes which affect everyone in the immediate area. For instance think of the water pollution issues arising in Flint, Michigan when the city sought a cheaper water resource and did not explore the risks beforehand.

All sorts of circumstances can arise where businesses pollute the water unknowingly, or were unaware of the health consequences; or even polluted knowingly but did not have the information, resources or ability to prevent the pollution. This scenario is all to plausible when any business is seeking to reign in costs.So what can you do to protect your business and assets from liability for pollution if you are in a precarious position or just want to help?

Businesses should ask the following questions before making business or financial decisions which may negatively affect clean water.

What possible impact does my particular business have on pollution of the waterway? (Assess you specific situation).

What products to do you use which contain pollutants?
How do you dispose of your pollutants?
Is the disposal process environmentally safe?
Are any of the byproducts carcinogens, endocrine disputing compounds, heavy metals or toxins?
Are my employees adversely affected by exposure to these toxins?

How can I stop pollution or at least reduce my impact? Suggestions are:

Recycle office and industrial byproducts when possible
Prevent runoff of wastewater contaminated by industrial pollutants
Use water efficient processes where possible in the office. For example low flow toilets and automatic sinks for employees
Use water efficient processes and water purification in your day to day operations.
Do not dump untreated toxic substances produced as a result of your business processes into any water source
Prevent chemical leaks and spills
Ensure sewage is treated or and sent to the proper facility for sanitation
Work with your agent, carrier and risk management to establish safety plans

These are but a few ideas you can implement. Research your specific industry for available solutions, filtration systems, less toxic alternatives and products you can use to cleanse and decontaminate waters used in your business processes. Some online resources are: National Institute of Environmental Health Sciences, www.nies.nih.gov., Water Research Foundation, www.water.org, Water Online, www.wateronline.com and Pollution Online, www.pollutiononline.com. Also see and ISO 14001: 2004 & 20015.

If environmental pollution is excluded under your policy, which is very likely, your options are standalone policies, supplements and endorsements to your general liability policy or your business owner’s package. Your agent may have to obtain a policy from a specialty broker, e.g. Lloyd’s. Environmental pollution insurance has many nuances and one type does not fit all. Business owners need to be sure that you obtain the insurance you need to cover specific situations;for example, run off of waste water versus pouring chemicals into a river or waterway. Either or both can be excluded depending on the verbiage of your individual policy.

Proactive steps to obtain water pollution insurance may benefit your business

Additionally, you may receive tangible benefit from taking proactive steps such as receiving discounts and rate decreases from your carrier when you implement Water Pollution controls and safeguards which protect your employees and the public. Positive accolades, public support and recognition often follow proactive actions which can be used for marketing programs.

This blog post is not intended to be or to convey legal advice. All material and information have been created for general insurance informational purposes only, and should not be acted upon or accepted as legal advice and is not a substitute for obtaining legal advice from an attorney of your choosing.

Image Credit. Google Images: JPEG Image used under an Advance Search license free to share for commercial usage.

Is your Janitorial Company protected?

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.

Pest Control Companies: Beware of the mosquito

What liability risks are out there and what you can do to manage them

Pest control is a vast multi-faceted and highly regulated global business offering various types of services to control pests of all types to numerous industries and the public Pest control business liability classification codes are:

Pest Control

Pest control involves eradication or abatement of all types of pests, insects and rodents but none more evasive and resilient than the mosquito. In the United States Pest control companies often provide residential pest control options for mosquitoes and other insects both to individual homeowner’s, apartment complexes and other types of residential buildings as well as temporary lodging such as resorts and hotels Municipalities, townships, counties, water districts, states, countries and community based programs also undertake the eradication of mosquitoes, especially when there is a disease outbreak. Commercial pest control companies often subcontract with these entities to perform the actual pesticide application, monitor the mosquito population, train applicators and monitor certifications and licensure of employees/applicators.

The reason so much attention is given to eliminating this one insect; is the danger to human life, along with wildlife, associated with Vector borne diseases transmitted by mosquitoes after extrinsic incubation, e.g. Malaria, Yellow fever, West Nile Virus, Chikungunya and Dengue fever. The National Resources Defense Council indicates that these diseases are increasing as the insect population grows, due to the warming of the climate, along with the shifting rain and weather patterns. As a result, Additionally, another growing threat from the mosquito is on the horizon.

As the 2016 Olympics get under way the public, the business sector, medical professionals, human health organizations, environmental and government agencies and the pest control industry are warily eyeing the event as the Journal of America Medical Association states the potential for a pandemic is explosive due to the presence of the Zika virus, which is an emerging illness borne by mosquitoes, in the Olympics host county of Brazil.

Some states in the United State have already experienced cases of Zika. Most notably there have been cases reported in 15 counties in Florida and as consequence new laws have been enacted which impose even greater regulation for pest control company applicators. Other states as well may follow suit as the disease spreads.

In this case, the infected female Aedes genus mosquito is the carrier Zika Vector Control for the Urban Pest Management Industry). This particular mosquito type is an invasive species which is already established in America and by its nature continues to expand its range. It carries Zika virus, dengue fever and a possible link to microcephaly in infants. Additionally, is has been recently confirmed that an infected human male can sexually transmit the Zika virus to a female similar to AIDS while the virus is active. Zika is also possibly linked to severe brain damage and Gullian Barre’Syndrome.

A debate now rages among the scientific community as to whether or not microcephaly is associated with the Zika virus; or its actual root cause is a larvacide (growth inhibitor) called “pyriproxyfen” used for mosquito control by targeting the larval stage while in the water source. In Brazil, it was allegedly injected into by the Brazilian Health Ministry into the drinking water tanks to combat the mosquito population. See: “Chemical Larvacide, not Zika, true cause of Brazil’s Microcephaly Outbreak.” This larvacide is approved in the US by the EPA and worldwide by WHO

Either way the pest control industry will be squarely in the middle of the debate on how to effectively reduce the mosquito population using Integrated Pest Management with Biological Based Technology and still prevent harm to humans in response to the concerns raised about this disease in the National Pest Management Association Industry wide alert issued in January, 2016. Irregardless of which cause is the culprit it will have far reaching implications for insurance coverage for the the pest control industry.

Liability claims may rise in the form of general liability, professional liability and products liability as the number of victim’s increases and public alarm rises. Additionally, many local government mosquito abatement programs are being dropped by insurance carriers at a time when they are sorely General liability covers bodily injury due to your negligence (which is a failure to exercise reasonable care). Bodily injury means injury, sickness, disease or death. It is quite conceivable that a client that acquired Zika or other vector borne diseases could bring a negligence suit against a Pest control company, who failed to provide effective mosquito control for their residence, barring another possible source of contamination, dies or is injured, or their unborn child is borne with birth defects, caused by the disease or from the products used to abate this pest.

The Supreme Court of California widened the legal playing field when it held that pesticide application may not be excluded summarily under the pollution exclusions clause of an insurance policy without a thorough analysis of the facts and can be ordinary negligence performed in the general course of doing business in John R. MacKinnon vs. Truck Insurance Exchange (2003). As a result varying coverage has evolved for pest control companies.

These coverage may have different names but can be added as a supplement or rider to most general liability and business owner’s packages or can be obtained as special risk insurance specific to the industry including but not limited to mosquito abatement, fumigation, exterminator, pollution care custody and control, Crisis management endorsement and last but not least chemical liability. With the advent of new diseases and chemical compounds to address them Pest control companies must become or remain pro active to combat the negative impact caused by just one list insect.

The key factor is to review your company’s general liability policy or business owner’s package and be sure the wording covers pesticide application and mosquito control in the ordinary course of business and to make sure that specifically named diseases and/or vector borne illnesses are not excluded; or if excluded, purchase a rider, a supplement or special risk insurance policy. Also consider raising the aggregate amount on your general liability. You also need to make sure that if you are utilizing Biology Based Technology and larvae based pesticides (even if approved by the EPA) used on or near a water sources are covered, and obtain specific coverage and products liability for those products where there is either a known or potential risk for those pesticides and chemical degradation residue even if the product is approved for use under the Federal Insecticide Fungicide and Rodenticide Act and the EPA.

Products liability is necessary if you are selling a product or dispersing it into commerce. Professional liability is necessary if you are recommending products for use as part of your business or selling them to clients separately. It would be fiscally prudent to have liability for any known or emerging vector borne disease spelled out, if obtainable; but you primarily want to make sure they are not excluded under your policy.

If it is proven, that the chemical pyriproxyfen used in larvae applications is the cause of microcephaly, rather than the Zika virus, then there is sure to be tort cases similar to those brought regarding the Thalidomide tragedy. (Disturbingly, Monsanto is either the parent company or a partner with Sumitomo which makes this chemical. Monsanto is the maker of Agent Orange, 24-D and Roundup). If you are recommending the use of larvae applications, and use or sell this particular chemical or any type of application that causes an environmental risk due to the degradation of chemicals in your pest control business it is vital that you have environmental coverage as well.

As the world population rises and various new diseases emerge and new chemical compounds and pesticides are developed to eliminate the pests and thus combat the diseases the risk increase proportionally for a pest control company. Excellent comprehensive insurance packages are your best protection.

Business Liability: Artisan Contractors

SIC Business Insurance Codes:

7342 Disinfecting and Pest Control services
2879 Pesticides and Chemicals-Not classified Elsewhere

NAICS Liability Classifications:

561710 Exterminating and Pest Control Services
325320 Pesticide and Agricultural Manufacturing

Business ISO General Liability:

Code 43860 Fumigators
Code 43470 Pest Control Services