Clearing the Fog on Pollution Coverage for Manufacturers

Environmental and pollution concerns are no foreign subject to the manufacturing industry. The use of various chemical substances and materials throughout the manufacturing process can pose a risk to the surrounding environment, the global community and the health of the nearby population if these materials are improperly used, stored or disposed of. Additionally, with rising concerns over climate change and environmental protection, there are increased and evolving regulatory and compliance requirements placed on manufacturing and production firms across the country. In fact, according to Climate Liability News, a number of climate liability lawsuits “exploded onto the world stage” in 2018. All of these factors contribute to the very costly and damaging implications of a pollution/contamination incident by your manufacturing firm.As a responsible corporate citizen, you likely have all the proper safety protocols and procedures in place to protect against a major pollution/contamination incident. But are you prepared to deal with the unexpected? What if technological or human error create a breach in your safety mechanisms causing contaminants to run on and off your premises? What if an unexpected disaster such as a fire occurs causing a material that is properly stored at normal temperatures to expand and produce toxic gases? While these occurrences are infrequent, they are often very large, expensive and complicated. Your firm could be found liable and responsible for the clean-up, property damage, defense, regulatory fees, bodily injury costs and more.

Pollution or environmental liability insurance helps to protect manufacturers of all sizes against any liability from damage that was caused by hazardous and waste materials. Most standard commercial general liability policies include a  pollution exclusion which according to the International Risk Management Institute, Inc. (IRMI) is “a provision in either first-party or third-party insurance policies that excludes coverage for losses caused by ’pollution,’ a term usually defined to mean an irritant or contaminant, whether in solid, liquid, or gaseous form, including—when they can be regarded as an irritant or contaminant—smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”

Pollution or environmental liability programs can be offered as a blanket policy for your defined operations or on a project-basis, an option that may be favorable for a specific contract project requiring potentially toxic materials. Additionally, these policies can be paired with a professional liability program to protect against the implications of a pollution/contaminant event as a result of professional errors, acts and omissions.

Every manufacturer likely has at least one pollution exposure. You can work with a trusted RCM&D advisor to analyze your existing coverage, identify any gaps and ensure you are prepared for swift, competent and cost-efficient action in the event of an unexpected pollution/contamination incident.