As awareness around the impacts of pollution and environmental damage seeps deeper into the public consciousness, businesses are doing more than ever to adopt green practices. But accidents do happen, and if your clients are in a certain industry, these accidents can lead to significant environmental and financial damage.
This increased awareness has led to a tightening of environmental regulations, and business owners across all industries may face a plethora of negative impacts if they’re found to be at fault. While doing everything to prevent an environmental event from occurring should be the number-one priority, having comprehensive environmental insurance in place could be the thing that keeps your client’s business alive.
“People are realizing that environmental liabilities are not exclusive to big oil or some smokestack industry,” explains
Marsh Duncan, SVP of underwriting at Colony Specialty. “It’s the shop owner putting a new roof on his old warehouse; it’s the contractor remodeling your bathroom. It’s fires and bad weather. More than ever, people realize that environmental liabilities and expenses can have a big impact on everyday businesses.”
In response to the increased scrutiny around environmental issues, brokers have a growing responsibility to provide their clients with protection from loss of income or other costs associated with an unexpected environmental situation. “The way that federal legislation is currently written, it casts a net that is so wide that insurers and property owners can easily be pulled into environmental litigation,” say Gina Jones, assistant vice president of environmental programs at Burns & Wilcox. “Because the net is so wide, even if your client is not held responsible, they’re going incur defense costs, which a good environmental policy will cover.”
Since 2008, the number of carriers offering environmental policies has tripled. The terms are now generally broader, and the products are decidedly more comprehensive. One of the most significant characteristics of the environmental risk space is how rapidly it changes; it’s a segment of the market that refuses to stand still. “What’s brilliant about current environmental policies is that they’re written in a very broad manner, and they have the ability to adapt to the changing environmental legislation,” Jones says. “If something is not considered an environmental condition today, but tomorrow it is because of a legislation change, our policies will always pick that up.”
An effective environmental policy gives business owners peace of mind that any environmental or pollution issue will not lead to significant financial harm. Comprehensive environmental policies can cover clients for both sudden and gradual pollution events and third-party claims, including injury, property damage and clean-up costs. An environmental policy should also cover emergency costs and claims expenses, including investigation and legal defense fees, which can escalate rapidly.
“New legislation is leading to more clients than ever before having problems with the mandates and jurisdictions, which then opens up clients for liability,” says Michael J. Bernay, CEO and managing director of PERse. “Environmental coverage is defi nitely getting more important, and for most clients, the fear is the uncertainty – although most insureds that we deal with in the renewable space have a good handle on what they’re getting into and can either transfer the risk internally or correct a situation while they’re getting involved.”
(To be continued...)
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