As the old adage says, nothing is more certain in life than death and taxes. The insurance equivalent of this certainty is pollution and exclusion found in liability policies. Many insurance companies will spend a page or more excluding pollution from coverage. It is absolute, final and comprehensive. Some policies and companies use this exclusion to not defend or pay for claims that really have no pollution in them as part of the loss event. The exclusion takes on a life of its own when the claim happens.
As a rule of thumb, standard liability policies from the big-name carriers will always exclude bacteria, mold, HAZMAT, gradual and first party pollution, arsenic, radon, lead, corrosives, and more.
Pollution Exclusions in the News
A well-known U.S. carrier, for example, has a program for water well drillers. It is a very reputable company, but its program has the standard pollution exclusion. In a recent case, a well driller was drilling a water well and inadvertently ruptured a septic tank by mistake. The water and refuse in the tank flowed into a nearby church building. The carrier denied the claim because the septic tank had what they termed was a “pollutant” in it, and was thus excluded under their policy. The insured had no coverage for the damage to the structure or the cost to clean it up. A lawsuit ensued and the Michigan state court of appeals upheld the declination of liability but did require the insurer to pay defense costs. However, the carrier was not asked to provide any indemnity payment. That took several years to wind through the court system and legal process. The owner had to pay for his own counsel in these proceedings, plus pay the cost of the loss. As you can imagine, it took a great deal of time and money from the owner.
Our policy provides the broadest pollution coverage in the market for water business standard by excluding the pollution exclusion itself. It creates coverage for any pollution-related bodily injury or property damage claim against you, plus unlimited defense cost for your organization. Under our policy, the previously-mentioned water driller would have had coverage for their claim.
We then add to the pollution grant of coverage by providing you protection from loss caused by claims filed against you by government or regulatory agency. Any costs they incur for clean up are also covered as they assess those costs against you. Any effort you take to mitigate and control loss are covered if there is reasonable belief that an imminent and substantial endangerment to the public health exists.
So we have helped rewrite the old adage. We say that like death and taxes, it is just as certain that Pollution and Coverage come together in our liability policy!
About Watercolor Management
WaterColor Management has insured the water industry for over 30 years. Our policies include unlimited defense cost coverage in the event of a lawsuit against you. Call us at (256) 260-0412 or email firstname.lastname@example.org for a quick quote for your Water Business Professional, Products/Completed operations, Pollution and General Liability Insurance.