Environmental liability insurance
Environmental liability insurance
Environmental liability insurance, also known as pollution insurance, provides protection for environmental risks faced by certain businesses. It helps cover pollution legal liability and cleanup costs.
Why do small businesses need environmental insurance?
Environmental hazards can arise from many sources and can affect businesses in almost any line of work. Under both federal and state laws, any business, organization, or individual could be held legally responsible for any pollution damage if they cause a pollution incident that damages properties, individuals, and the environment itself.
Depending on the pollution conditions, you might have to hire environmental consultants and pay for expensive remediation. Your staff, neighbors, or customers could suffer medical issues or file a lawsuit. This is where environmental liability insurance can help.
Environmental liability insurance, also known as pollution insurance, provides businesses with liability coverage for environmental risks from pollution exposures, as well as any pollution legal liability and cleanup costs they might face.
- Lead paint and water lines
- Mold
- Legionnaires’ disease
- Noxious odors
- Viral and biological risks
- Oil and chemical spills
- Air and water pollution
- Brownfields and toxic disposal sites
Environmental liability coverage can often be added as an endorsement to your general liability insurance for an added cost, as it is typically not included with this policy. In fact, many general liability policies have an “absolute pollution exclusion” that denies coverage for most pollution and environment-based events.
What does environmental liability insurance cover?
Environmental liability insurance covers damage resulting from an environmental mishap, including:
Bodily injuries
If a non-employee suffers an injury or illness from pollution unexpectedly released by your business, environmental liability insurance can help pay for their medical expenses. It also covers legal expenses if the individual sues your business for the harm it caused.
Property damage
An environmental insurance policy can cover expenses when pollution from your business accidentally damages or destroys another person’s property.
Pollution cleaning costs
Environmental insurance can cover cleanup or remediation costs that result from your business operations, if you violate any state or federal environmental protection laws.
Business interruption
Pollution liability insurance typically includes business interruption coverage, which protects your business if it's forced to close temporarily due to an environmental accident. However, the inclusion of this coverage may depend on your industry risks and location.
Check with an agent when you buy a policy so you know what coverage is included.
How much does environmental insurance cost?
For Insureon customers, the average price of environmental insurance is $223 per month or $2,675 per year, based on median calculations of policies sold. The cost of environmental insurance coverage depends on several factors, such as:
- Industry risks
- Location
- Number of employees
- Annual payroll
What our customers are saying
Who needs environmental insurance?
Environmental liability insurance, a type of contingent liability insurance, benefits a wide range of industries that risk generating pollution that damages the environment around them.
Depending on your work, you may need this coverage to qualify for contracts. Lenders might also require this coverage before granting a loan, if there are any environmental concerns related to your business.
Several industries that often buy this coverage as part of their risk management plan for dealing with pollutants include:
Construction and contracting
Also referred to as contractor’s pollution liability insurance (CPL), environmental insurance can provide coverage for a variety of construction contractors who deal with solvents and other chemicals that might be part of an accidental spill.
For example, if a general contractor is working at a construction site that contains hazardous substances, and stormwater runoff from the site threatens aquatic life in a nearby river, this policy would protect the contractor financially from mitigation efforts and site pollution liability.
Manufacturing
Manufacturing businesses may find that pollution liability insurance is a necessity for their day-to-day operations, as it can protect them from liability over any damaging leaks of toxic substances from factories or other locations.
For example, if a metal manufacturer regularly uses hazardous chemicals to treat their products, and a storage tank accidentally leaks into a nearby ravine, environmental insurance would help pay for lawsuits over harm to the surrounding area and any necessary cleanup costs.
Businesses that specialize in the distribution or transportation of manufactured goods such as these may find that pollution coverage could protect them from inherent risks involving hazardous materials, as well.
Healthcare facilities
Healthcare facilities may find that environmental liability coverage is necessary to help protect their handling and disposal of hazardous waste from their premises.
For instance, if a medical office is trying to throw out used needles or bandages, and a trash bag accidentally rips and spills its contents into a storm drain, the office might face legal action over the improper disposal of hazardous materials. Environmental insurance could help cover legal costs, including court fees or a settlement.
Top professions that need pollution insurance
Don't see your profession? Don't worry. We insure most businesses.
What does environmental insurance not cover?
Some business-related mishaps might cause environmental pollution, but are actually covered by policies other than environmental liability.
Exclusions from environmental coverage include:
Fire and smoke damage
If a customer’s property was damaged by a fire caused by your business, it would be covered by your general liability insurance.
If your own business property was damaged, it would be covered by your commercial property insurance or business owner’s policy (BOP). A BOP combines general liability coverage and commercial property insurance in a single policy at a discounted price.
Hazardous products
If any hazardous or toxic materials were found in products manufactured or sold by your company, you would need to be covered by a product liability insurance policy.
Employee injuries and illnesses
If an employee is injured or becomes ill due to a work-related pollutant, such as asbestos at a construction site, workers’ compensation insurance would cover the employee’s medical expenses. It would also cover your legal costs if the employee sues over the injury.
How do I get environmental insurance?
To find the right insurance solutions for your business, fill out our free online application to get quotes from top-rated providers.
While some carriers offer environmental insurance as a standalone commercial insurance policy, most offer it as an add-on to general liability insurance or a commercial package policy (CPP).
A CPP combines general liability and commercial property insurance into one policy, with more coverage options and policy limits than what’s typically available in a business owner's policy.
It’s important to carefully review your insurance policies to see what exclusions they might have and to make sure you’re covered. For any questions about coverage, you can contact an Insureon agent.
Other important policies for small businesses that purchase environmental liability insurance
While environmental liability coverage can be an important part of your risk management plan, you should consider these other small business insurance policies to fully protect your business from financial losses:
Workers’ compensation insurance: Required in most states for any business with one or more employees, workers' comp covers the medical expenses and lost wages relating to workplace injuries and illnesses.
Professional liability insurance: Also known as errors and omissions insurance, professional liability protects small businesses against the costs of client lawsuits over unsatisfactory work.
Commercial auto insurance: Required in most states for businesses that own vehicles, this policy covers your legal bills, medical expenses, and property damage if a business vehicle is involved in an accident.
Inland marine insurance: This policy covers your business property, such as products, tools, and equipment, while it’s in transit over land or stored at an off-site location.
Commercial umbrella insurance: Once a policy’s limit is reached, commercial umbrella insurance provides additional coverage for liability claims made on general liability, commercial auto, or employer’s liability insurance.
Need a policy recommendation? Answer three questions and we can help you find the right coverage for your business.
FAQs about environmental insurance
Is environmental insurance the same as pollution liability insurance?
Yes. Environmental liability insurance and pollution liability insurance both refer to the same type of insurance coverage.
Some industries use different terms for the same type of coverage. For example, contractors and other construction professionals often see this policy referred to as contractor’s pollution liability insurance.
In addition to industry differences, insurance companies may use different terms for similar insurance products. Check with an agent if you're unsure which type of coverage you need.
Can I add coverage to an environmental policy?
Yes. Many larger companies that own or rent their workspace can add premises pollution coverage as an endorsement to their environmental insurance policy.
Premises pollution liability (PPL) coverage, which is sometimes referred to as site pollution liability, provides first-party coverage for bodily injuries, property damage, or environmental damage that occurs at a location owned, operated, or leased by the policyholder.
It can cover spills and leaks that occur on the property itself, as well as underneath the property or in any nearby areas that are affected by pollutants from the property.
What's the difference between a general liability policy and an environmental policy?
General liability insurance covers common business risks such as customer injuries, damage to a customer’s property, and advertising injuries. While it doesn’t typically include environmental insurance, you can often add it as an endorsement.
Environmental claims can be costly so it’s important to avoid any coverage gaps, especially if your business might be held responsible for pollution. Insureon can help ensure that your insurance policies provide all the coverage you need if your business deals with hazardous materials.
Find environmental insurance quotes from trusted carriers with Insureon
Complete Insureon’s easy online application today to get insurance quotes from top-rated U.S. carriers. You can also consult with an insurance agent on your business insurance needs, including any environmental concerns.
Once you find the right insurance products for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance the same day.
