How Can Brokers Aid Clients With Environmental Liability?

Pollution-control initiatives in New Jersey and California, for example, are placing pressure on firms to clean up their act. As part of the Biden administration’s strategy for federal enforcement of environmental justice, a new office for environmental justice has also been established.

Because of the strong drive for environmental justice, Daniel Singerman, who is in charge of complicated claims at Risk International, believes that businesses should consider how sensitive they are to pollution liabilities.

“Leaders are doing a better job of enforcing environmental rules,” Singerman told Insurance Business.

Long-term environmental liabilities are among the most difficult risks for corporations doing business in the United States to cover. Agents and brokers must have solutions available if their customer has historical environmental obligations and does not have the appropriate coverage.

“Companies who may not have been on anyone’s radar or involved previously might suddenly find themselves tagged or receiving a notification suggesting that they may be accountable for this [pollution] issue,” Singerman added. ” The longer the government and regulators work on these matters, the more likely a corporation will be called in.”

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The issue is that a general liability insurance issued today is unlikely to adequately protect enterprises.

“There will very definitely be a full prohibition on pollution.” “If you operate a firm now and have cause to believe you could have environmental liability issues, you will need to obtain a particular coverage,” Singerman said.

Old methods of getting rid of waste and oil that gets into the water system are two factors that might render a firm responsible. “It may be as simple as the way that firm created its goods causing pollutants to seep into the water or land surrounding it,” Singerman said.

Even if a corporation does not have a separate pollution liability policy, it may be able to utilize insurance if a third party sues it or the government takes action against it. If you held a general liability coverage before to 1986, you would have been protected for at least some pollution occurrences.

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This implies that a customer may be allowed to utilize their general liability coverage if the pollution responsibility occurred prior to 1986. However, coverage may vary depending on the sorts of activities that polluted the environment and the states where the pollution occurred. Singerman said unequivocally that firms must be allowed to access their existing insurance coverage.

Insurance & Archaeology

Companies should be proactive in dealing with environmental liability issues by retaining copies of their insurance policies dating back decades. Singerman advised agents and brokers to advise their customers to locate these papers as soon as possible and to consider if they need to notify any known insurance providers.

“Any firm that has been established for a long time and may have anything to do with pollution should strive to have a comprehensive grasp of your past insurance,” Singerman said.

“When you’re in court, it becomes more essential.” Even if no cases are now pending, it’s a good idea to be prepared if you believe something may happen to you in the future.

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Examining old insurance policies may be difficult for many organizations. Other company documents, according to Singerman, might assist in the discovery of critical policy information. Records such as insurance certificates, legal papers, accounting ledgers, and environmental health and safety documents might assist businesses in determining their insurance history.

What if there are no other options for obtaining insurance coverage from the past? Singerman suggested hiring a “insurance archaeologist” who can locate misplaced or forgotten insurance policies. The investment might result in future coverage worth millions of dollars for ongoing litigation and other liabilities.

“I believe that many businesses want to do the right thing and clean up if it is their job.” However, it is costly. It may make a tremendous impact if you have an insurance resource to assist you with this,” Singerman said.

“The company does not have to pay for itself. There are several reasons to seek out and utilize these resources.

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