Overlooked Risk: Environmental and Pollution Exposures in Real Estate
There’s more than meets the eye for real estate companies regarding pollution and environmental liability coverage. While many will consider these exposures to be basic mold and asbestos-related risks, a host of other exposures make a pollution or environmental liability policy critical to consider for all organizations.
This write-up will touch on vulnerabilities first covered by Environmental Risk Professionals in several sections of the real estate sector to zoom out and see the bigger picture for this critical line coverage.
Residential – Apartments and Condominiums
Residential properties such as apartments and condominiums are hotbeds for potential environmental exposures. Air quality, mold, legionella, asbestos, lead and the storage of hazardous chemicals are all risks property owners face. On top of this, many general liability policies include exclusions that can leave significant gaps in coverage for pollution and environmental-related risks. Pollution coverage will be critically important if you are a property owner, especially if your portfolio contains older buildings.
Hospitality – Hotels and Casinos
The hospitality industry shares many of the same exposures as residential properties like asbestos and mold; however, there are other added elements. These include extra facilities like onsite laundry services, restaurants and recreational spaces such as golf courses. The chemicals used to clean maintain these facilities may lead to ground or air pollution as well as water contamination. Another potential exposure arising from these facilities includes the potential for improper disposal or the complete abandonment of waste.
Commercial – Shopping Centers and Retail
Shopping centers and other retail spaces face many exposures from not only the property itself but also from the nature of retail operations. While property owners deal with typical building exposures such as mold and asbestos, contaminants from tenants, generator systems, onsite storage tanks, and leakage from delivery trucks seeping into groundwater are all realistic exposures to expect. It is important to consider coverage, as pollution laws are stringent in certain jurisdictions. Property owners can be found liable for these exposures even if they are not directly responsible for them.
Commercial – Office Buildings
The most significant exposure office buildings face are indoor air quality exposures such as mold and asbestos, as well as improperly stored chemicals and cleaning agents. Other exposures for these buildings include painting/maintenance, pesticide application, and hazardous chemicals and materials disposal.
Whether it’s new construction or renovation, property developers face various pollution-related risks throughout their day-to-day operations. The release of contaminants from a job site could enter a sewer system leading to third-party claims. Renovations may also include the disruption of asbestos, lead paint and mold pollutants, creating a potentially dangerous and costly situation for workers and property owners.
Questions to Consider
Whatever your real estate portfolio looks like, there are many reasons to strongly consider purchasing Pollution and Environmental liability coverage.
Your broker can help answer the following questions in collaboration with the risk manager, financial officer or business manager.
- How do you view your pollution or environmental liability and cleanup exposure?
- Do you have any underground storage tanks?
- Are material safety data sheets available for hazardous substances within your operations?
While many organizations may overlook environmental and pollution-related risks, these exposures are real and require coverage to protect your business from potentially costly litigation. Talk to your trusted RCM&D advisor today for more on pollution coverage and how it can help protect your business.