Although pollution liability remains largely misunderstood by many commercial enterprises, it should be a priority for any organization that operates with or near natural resources.
“Pollution Liability may be confusing to some of our clients,” said Trisha Teoh, senior underwriter, South Western Group Ltd. “They’re not really sure where it sits, and often ask if their CGL, D&O or property policy will provide coverage.”
But as Canadians become more environmentally conscious, government legislators and regulators are on the constant lookout for any business in violation of environmental protection laws.
For this reason, brokers have a mandate to inform commercial clients about how they can shield themselves from the number of potential exposures that can arise as the result of inadvertent pollution claims.
“When we educate brokers, the biggest thing we tell them is that regular CGL will not provide comprehensive coverage for pollution,” said Ghazal Hamid, branch manager, South Western Group Ltd. “Even if a client has a CGL policy with accidental pollution coverage, it likely only covers a sudden pollution exposure that’s reported within 120 to 240 hours of the incident in question.”
This protection is particularly critical, since it will compensate for the extensive losses that can accompany a loss – even those beyond initial cleanup costs.
“Even if the cleanup only costs $1 million, there are still legal expenses, business interruption, and the biggest cost for companies which is often natural resource damages,” said Hamid. “Those can add up to $15 million or $30 million because it’s a regulated class.”
Pollution liability coverage, however, can help put clients’ minds at ease.
“We saw the general liability gaps that exist in the pollution space and wanted to be able to provide a product that can fill those gaps and protect against regulatory provisions and contractual requirements,” said Hamid. “And we’ve got a pretty broad appetite.”