In today’s climate, organisations are increasingly held to account for their actions by the public, and with a 24-hour news cycle, a single event can quickly turn into a company’s worst PR nightmare.
When it comes to environmental issues, the stakes are especially high, but many firms are still not taking out environmental liability insurance – and more needs to be done by both brokers and insurers to educate clients, according to
Chubb.
Today, brokers need to “intimately understand the customer’s business” to ensure they are helping the client manage their risk, and to develop and craft insurance solutions to provide the best coverage possible, Chris Robertson, vice president of environmental & construction at Chubb Canada, told Insurance Business.
Brokers should also work with their clients to understand the minor nuances of their operations, and to make sure that all exposures are identified, considered and dealt with, Robertson explained.
Insurers must take on the role of helping to educate and provide insight and training to brokers about environmental risk, which in turn can be used by brokers to help clients. Together, insurers and brokers can work together to help inform clients as to what is and isn’t covered by a general liability policy – an area which is often misunderstood.
“Some General Liability (GL) policies will extend coverage to liability arising out of sudden and unforeseen pollution events,” Robertson explained. “These policies may have general language such as sudden, unintended and unexpected, or it may tie an event back to a pollution event that is discovered within a defined time and reported within a set time period from discovery.”
But even where a GL policy provides an element of pollution coverage, usually as an exception to an exclusion, the GL policy is only intended to respond to compensatory damages to a third-party that has suffered bodily injury or property damage, he noted.
“This may address an element of remediation costs but not likely remediation costs on the insured’s premises, nor arising out of a governmental order. One of the main exposures arising out of a pollution event is the cost to remediate and to respond to regulatory requirements in the form of orders or compliance with regulations,” Robertson continued.
Importantly, most GL policies will not address clean-up costs unless and to the extent they constitute property damage.
He added: “Considering that the environment itself is not a third-party, and there are other limitations with respect to pollutants brought to a job site and related to waste, there are significant gaps in a standard liability policy that most dedicated pollution policies in the market would address.”
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