A Lesson in Timely Claims Reporting

file claims

A recent appeals decision denied coverage to a company on its directors and officers (D&O) liability insurance policies for taking too long to file the claim.

In this case, the 5th U.S. Circuit Court of Appeals in New Orleans sided with an insurer that had denied a claim a company had made after being sued for failing to pay overtime wages to nonexempt employees.

The insurance company had denied the claim because the first employees’ claim was made in August 2014, but the company failed to inform the insurer of that and subsequent claims until September 2015.

This case illustrates the importance of filing claims in a timely manner.

When the employer actually got around to filing the claim it had an in-force D&O policy with the insurer, although there was an earlier policy in force when it had received the first claim of failing to pay overtime.

Under the policy in force at the time of the first claim, the insurer would have been obligated to pay all claims made against the company under the policy.

“That earlier policy would have provided coverage except that the insured failed to comply in 2014 with a notice provision. We conclude the district court was correct to rely on this difference,” the three-judge panel in the appellate court wrote in an opinion that upheld a lower court’s ruling.

Timeliness

One of the critical obligations of an insured is the duty to timely report claims or circumstances that may give rise to a claim. Failure to report a claim in accordance with the policy requirements can result in a claim being denied, or worse, having the entire policy voided.

D&O policies are “claims made” policies, meaning that coverage exists only for claims made during the time period the policy is in effect. Claims made while no policy or extended reporting period are in effect are not covered.

Claims-made policies also have retroactive dates. Ideally, the retroactive date is the day the insured started business, but it can also be the day that it first purchased professional liability coverage.

Assuming the retroactive date has not been advanced, the policy in force when a claim is made is the policy that will respond, regardless of when the negligent act, error or omission took place.

However, there is one important qualifier. This insurance applies to claims that took place after the retroactive date, but prior to the end of the policy period, provided that the insured had no knowledge of the claims prior to the effective date shown in the declarations.

In other words, if you knew of a claim prior to the time you renewed your claims-made policy but did not report it, and if a claim is subsequently made, the insurance company can deny coverage. It doesn’t matter whether or not it’s been continuously renewed by one insurance company, the policy excludes it.

This underscores the importance of timely reporting of all claims prior to renewal each year.

Discipline Should Be Part of Your Safety Program

discipline red card

Does your injury and illness prevention program spell out the disciplinary action your company will pursue if its safety rules are not adhered to?

Addressing disciplinary issues can be a very sensitive and stressful process for most managers, supervisors and employees. However, if disciplinary issues are avoided or handled poorly, it can lead to serious consequences such as property damage, injury or even fatality.

Looking at discipline not as a form of punishment but as a rule or system of rules governing conduct or activity in order to eliminate unsafe circumstances, might ease the stress for the owner, manager and employee.

Education is the key to establishing proper disciplinary procedures and holding employees accountable to the company’s health and safety policy and program, as well as to applicable regulatory requirements.

The main objective of a disciplinary program is to ensure that rules and safe work practices are taken seriously by all employees and that they are followed. When disciplinary action is deemed appropriate, it should be conducted in a timely manner. Trying to conduct unsafe behavior by waiting only allows a habit to become more ingrained.

Discipline should be positive, not punitive or negative. The goal is to correct the problem, action or behavior. The type of discipline should fit the severity of the misconduct and be conducted in private.

Five-step Disciplinary Program Process

  • Reviewing policy and procedures (managers and supervisors)
  • Investigation of accusations and infractions (supervisors and safety & health reps)
  • Determining and reviewing disciplinary action (supervisors and safety & health reps)
  • Documenting disciplinary actions and program enforcement (supervisors and safety & health reps)
  • Conducting disciplinary meetings and promoting safe work practices and compliance to regulatory requirements (supervisors and safety & health reps)

If your company hires subcontractors, they should also be required to comply with your health and safety policy.

Sample disciplinary action

You should make it clear that the company reserves the right to discipline employees who knowingly violate company safety rules or policies. Disciplinary measures will include, but not be limited to:

  • Verbal warning (documented) for minor offenses.
  • Written warning for more severe or repeated violations.
  • Suspension, if verbal and written warnings do not prove to be sufficient.

If none of the above measures achieve satisfactory, corrective results, and no other acceptable solution can be found, the company will have no choice but to terminate employment for those who continue to jeopardize their own safety and the safety of others.

Non-punitive discipline

The first step of formal non-punitive discipline is to issue an “oral reminder,” with the manager’s primary goal being to gain the employee’s agreement to solve the problem.

Should the problem continue, the manager moves to the second step – the “written reminder.” Together, the manager and the employee create an action plan to eliminate the gap between actual and desired performance.

If disciplinary discussions have failed to produce the desired changes, management then places the individual on a paid, one-day “decision-making leave.” Tenure with the organization is conditional on the individual’s decision to solve the immediate problem and make a “total performance commitment” to good performance on the job.

The employee is instructed to return on the day following the leave with a decision either to change and stay or quit and find more satisfying work elsewhere. Thus, the purpose of the disciplinary transaction has changed from a punishment method to a process that requires individuals to accept responsibility for their own behavior, performance and continued participation in the enterprise.

New Law Bars Hairstyle Discrimination

woman with curly hair

California Gov. Gavin Newsom has signed legislation that will make it illegal for employers to discriminate against employees and job applicants based on their hairstyle if it is part of their racial makeup.

The law, known as the CROWN Act (Create a Respectful and Open Workplace for Natural Hair),

amends the state Education and Government Code to define race or ethnicity as “inclusive of traits historically associated with race, including, but not limited to hair texture and protective hairstyles like braids, locks and twists.”

This broader definition of race means that natural hair traits fall under the context of racial discrimination in housing, employment and school matters.

The law could apply to anyone, but as legislation it was specifically introduced to stop instances of discrimination against black employees over their natural hairstyles. There have been a number of high-profile incidents over the past few years where employees and students were discriminated against based on their hair:

  • A sixth-grade Louisiana girl was expelled because her hair violated school policy.
  • In October 2018, a wrestling official in New Jersey ordered a black wrestler to cut his dreadlocks if he wanted to compete.
  • An Alabama woman sued her employer for discrimination after the organization had rescinded a promotion to another position because she had dreadlocks.

The new law “protects the right of Black Californians to choose to wear their hair in its natural form, without pressure to conform to Eurocentric norms,” said Sen. Holly Mitchell (D-Los Angeles), who introduced the legislation.

The takeaway

The law means that it will be illegal for employers to discriminate against someone because of their hairstyle if it’s tied to their ethnicity and race. Employees that fall into this category can sue their employer for discrimination based on race under California’s Fair Employment and Housing Act.

You should update your employee handbook to include this definition of race in the employment discrimination section, and also train your managers and supervisors in the change.

Remember, discrimination cases can be costly, even if the employer wins in the end. There are legal fees, costs of witnesses and damage to reputation to contend with.

The best prevention for discrimination is to have rock-solid policies in place. It’s also wise to secure an employment practices liability insurance policy. That’s a smart move for any business, particularly as the number of discrimination cases is on the rise nationwide, alongside higher jury awards for employees.

Cal/OSHA Issues Emergency Rules to Protect Workers from Wildfire Smoke

wildfire

Cal/OSHA has issued emergency regulations that require employers of outdoor workers to take protective measures, including providing respiratory equipment, when air quality is significantly affected by wildfires.

Smoke from wildfires can travel hundreds of miles and while an area may not be in danger of the fire, the smoke can be thick and dangerous, reaching unhealthy levels. The danger is worst for people with underlying health conditions like heart disease, asthma or other respiratory issues.

Cal/OSHA decided to start work on the new regulations after worker groups filed a petition asking the agency to step in and protect people working outside from unsafe air quality caused by wildfires.

Below is all you need to know about the new emergency regulations that are slated to take effect in early August 2019.

What to expect

The draft of the regulations, which were approved at a July 18 Cal/OSH board hearing, would require that employers take action when the Air Quality Index (AQI) for particulate matter 2.5 is more than 150, which is considered in the “unhealthy” range.

The protections would also be triggered when a government agency issues a wildfire smoke advisory or there when there is a “realistic possibility” that workers would be exposed to wildfire smoke.

All California employers with “a worker who is outdoors for more than an hour cumulative over the course of their shift” would be required to comply with these regulations:

Checking the Air Quality Index – Employers of outdoor works must check the AQI at the worksite to see if it is above 150, which would require the employer to take protective measures for the workers. AQI can be checked in the following ways:

  • The U.S. Environmental Protection Agency’s AirNow website.
  • The California Air Resources Board website.
  • Your local air pollution control district website.
  • Checking PM2.5 levels at the worksite and converting them to the corresponding AQI (Appendix A of the regulations explain how).

Communications – Employers must establish and implement a system for communicating wildfire smoke hazards to affected employees, including allowing employees to inform the employer of such hazards at the worksite. Communications should include:

  • The current AQI for PM2.5.
  • Protective measures available to workers to reduce their wildfire smoke exposure.
  • Encouraging employees to inform the employer of worsening job site air quality.
  • Reporting symptoms such as asthma attacks, difficulty breathing and chest pain.

Training – Employers with outside works should train them in:

  • The health effects of wildfire smoke.
  • The right to obtain medical treatment without fear of reprisal.
  • How employees can obtain the current AQI for PM2.5.
  • The requirements in Cal/OSHA’s regulation about wildfire smoke.
  • The employer’s communication system.
  • The employer’s methods to protect employees from wildfire smoke.
  • The importance, limitations and benefits of using a respirator when exposed to wildfire smoke.
  • How to properly put on, use and maintain the respirators provided by the employer.

Suitable protection – There are a number of methods employers can implement to protect workers when the AQI for PM2.5 exceeds 150.

  • Engineering controls, such as providing enclosed structures or vehicles with effective filtration where employees can continue working, or
  • Administrative controls like:
  • Relocating workers,
  • Changing work schedules,
  • Reducing work intensity, or
  • Giving them additional rest periods, or
  • Respiratory protective equipment. The employer must provide respirators to all employees for voluntary use, and encourage them to use them.

Respirators shall be NIOSH (National Institute for Occupational Safety and Health)-approved devices that effectively protect the wearers from inhalation of PM2.5, such as N95 filtering face-piece respirators. Respirators shall be cleaned, stored, maintained and replaced so that they do not present a health hazard to users.

Where the current AQI for PM2.5 is 501 or greater, respirator use is required.

Why Workers’ Comp Claims Spike in the Summer

Construction Site

Workplace injury rates rise during the summer months. When summer rolls around, companies in many sectors, including agriculture and construction, significantly increase production.

Increased road construction raises risks for workers and drivers. Many of the newly hired workers are young and inexperienced, creating a high potential for workplace injuries.

Toiling in the sun is also a leading cause of weather-related injuries, including heatstroke, heat cramps and heat exhaustion. Heat illnesses occur when the body overheats to the point it cannot cool off, even with profuse sweating.

Young workers

Too often, young workers enter the workforce with little or no on-the-job safety training, heightening safety risks.

Recently, the Washington State Department of Labor & Industries released a report showing that teens are twice as likely to be hurt on the job as adults.

In Washington state, a total of 547 youths aged 17 and under were injured in the workplace in 2014, up nearly 14.7% over the previous year. Of the total, 173 were in the food and hospitality industries. The next largest total, 80, was reported in both the retail trades and agriculture.

Falls to the floor increased 77%, to 55 cases, as the chief cause of injury.

Young workers, aged 14 to 24, have more accidents because they lack the knowledge, training, and experience to prevent them. Some common issues employers encounter with young workers are:

  • They do not understand what can go wrong.
  • They do not always follow the rules.
  • They fail to use personal protective equipment (PPE) or use it incorrectly.
  • They horse around on the equipment.
  • They do not ask questions.
  • They think they are infallible.

It’s also important for supervisors to recognize the physical, cognitive and emotional developmental differences between young and adult workers. It takes extra effort to train and supervise seasonal employees on working safely.

Here are some training suggestions:

  • Repeatedly demonstrate job procedures and safety precautions. Don’t overlook the basics, such as starting and stopping equipment.
  • The step-by-step instructions for any task must include the task’s hazards and how to avoid them. Take the time to clearly explain the risks of not following the proper steps. Use examples.
  • Explain when and how to use PPE, as well as where to get it, how to inspect it, and how to remove and store it properly.
  • Train one-to-one with young workers and observe them performing tasks.
  • Encourage them to report problems and to ask questions.
  • Assign specific clean-up tasks and emphasize the importance of a clean, clutter-free worksite.
  • Control the hours worked. Many popular summer jobs, such as construction workers, landscapers, and jobs in hospitality and food industries, require long hours of work in the heat that can lead to fatigue, inattention, and stress, increasing the likelihood of injury.
  • Provide a mentor.
  • Demonstrate that safety is a priority at your facility. Words aren’t enough. New workers also need to see actions that reinforce the message: clean worksite, properly labeled hazardous substances and readily accessible safety data sheets, workers wearing required PPE and who are concerned about workplace safety and show it, and so on.

Heat illness dangers

While there are many excellent resources on dealing with heat, it’s important for employers to recognize that there are individual differences among workers and those who are struggling may be hesitant to complain.

The American Society of Safety Engineers calls heat the “unseen danger” at construction sites because the symptoms of heat illness can be subtle and misinterpreted as mere annoyances rather than signs of a serious health issue.

Workers new to outdoor jobs are particularly vulnerable. Implementing an acclimatization program, providing adequate water and frequent breaks are all critical, but the best way for employers to prevent heat illnesses is to consistently interact with workers to gauge how they’re feeling and provide current information on weather conditions.

Also, using apps, such as OSHA’s Heat Safety Tool, is a good way for workers to monitor their risk levels.

Is Your Business Prepared for Recreational Marijuana Use?

cannabis marijuana work

Companies in states that have legalized marijuana are wrestling with how to deal with employees that use, particularly if they did so the night before and are still feeling the effects the following day.

A new survey found that one-third of business owners are not prepared for managing the effects of legalized marijuana in the workplace. The biggest issue facing employers is ensuring that workers don’t come to work under the influence, or that they don’t sneak off for a few puffs during their lunch breaks.

The problem is that it’s difficult to see if someone is under the influence if they have smoked a little bit and are slightly “buzzed.” On-the-spot drug tests won’t work because marijuana can stay in the system for 30 days or more, making it impossible to know when they used it last.

With no clear guidance, some employers have responded by relaxing their drug policies to allow for employee consumption outside the confines of the workplace, while others have kept the zero-tolerance rules in place to thwart employees who may try to use cannabis during the workday.

Employer concerns

The biggest concern for employers is workplace safety, as well as the safety of customers and even the general public if a driving employee is using while on the clock.

When someone is under the influence their judgment is impaired and their reaction time is slowed. That could lead to workplace accidents and worker injuries. That, in turn, can result in fines by OSHA as well as higher workers’ comp rates, in addition to lost time by key employees.

If an impaired worker is operating equipment in a retail establishment and injures a customer or a vendor, you could be facing a substantial liability lawsuit.

If you have an impaired driver who causes an accident and injures or kills a third party, and/or destroys a third party’s property, you could also face a liability suit.

What you can do

First, you have to decide your business’s level of tolerance for employee marijuana use. Obviously, for workers using heavy machinery, or in other safety-sensitive jobs like drivers, it would be wise to have a no-tolerance policy in place that includes drug testing.

Whether pot is legal in your state or not, you are still free to ban marijuana use on the job, just as you can alcohol – and you can fire someone for using it on the job.

It’s important that whatever policy you put in place, it is communicated to employees through a staff meeting as well as in your employee handbook. You should inform them of the consequences of violating that policy.

For the sake of workplace safety and your overall liability exposure, you should consider restricting marijuana use to the extent permitted by law.

At the very least, you should prohibit marijuana use in the workplace, as well as marijuana impairment during work hours or in the workplace.

Your approach will depend on which state your business is located in. For example, California provides a constitutional right to privacy which restricts employers from monitoring off-duty conduct.

That said, pre-employment drug-testing is generally permitted, as long as it is conducted in a fair and consistent manner and administered to all applicants for a position within a specific job class.

After employees start working, they have a higher expectation of privacy. That means you should restrict any drug-testing to suspicion-based inquiries, like someone who appears under the influence. Random testing is highly restricted in California and should be reserved for certain safety-sensitive positions.

Remember though: There are exceptions for medical marijuana use. Most workers must be allowed to take medical pot, just as they would any other legal drug.

Cal/OSHA Working on Rules to Protect Outdoor Workers from Wildfire Smoke

wildfire

Cal/OSHA is developing regulations that would require employers of outdoor workers to provide respiratory equipment when air quality is significantly affected by wildfires.

Smoke from wildfires can travel hundreds of miles and while an area may not be in danger of the wildfire, the smoke can be thick and dangerous, reaching unhealthy levels. The danger is worst for people with underlying health conditions like heart disease, asthma or other respiratory issues.

Many employers want to hand out respirators to outside workers, but while there are no regulations or laws in place for how to protect your workers during smoky conditions, there are regulations governing the use of ventilators – and they are very specific.

The California Code or Regulations, Title 8, Section 5144 states requires that employers that distribute respirators to their employees must take certain steps, such as implementing a written respiratory protection program, requiring seal-testing before every use and conducting medical evaluations of all workers who will wear a respirator.

Cal/OSHA decided to start work on the new regulations after worker groups filed a petition asking the agency to step in and protect people working outside from unsafe air quality caused by wildfires.

What to expect

The regs are still in draft form and are unlikely to be completed this summer for the upcoming fire season. But here is what you can expect:

The draft of the regulations would require that employers take action when the Air Quality Index (AQI) for particulate matter 2.5 is more than 150, which is considered in the “unhealthy” range.

The protections would also be triggered when a government agency issues a wildfire smoke advisory or there when there is a “realistic possibility” that workers would be exposed to wildfire smoke.

All California employers with “a worker who is outdoors for more than an hour cumulative over the course of their shift” would be required to comply with these regulations:

  • Checking AQI forecasts when employees may reasonably be expected to be exposed to an AQI or more than 150.
  • Establishing a system of communication with employees to inform them about the AQI, changes in conditions that can lead to bad air quality, and protective measures.
  • Training their workers in the steps they would have to take if the AQI breaches 150.
  • First-line protections that employers could implement include:
    • Engineering controls, such as providing enclosed structures or vehicles with effective filtration where employees can continue working.
    • Administrative controls like:
      • Relocating workers,
      • Changing work schedules,
      • Reducing work intensity, or
      • Giving them additional rest periods.
  • If none of the above are feasible, the rule provides for a voluntary respirator (without fit-testing and medical examinations) use when the AQI is between 150 and 300.
  • If the AQI is above 300, fit-testing and a medical examination prior to use would be mandatory.

The new regulations by Cal/OSHA are pending with the Cal/OSHA Standards Board, which is expected to vote on them in July, but it’s unclear how quickly they would be implemented.

For now, if you do have outside employees who are confronted with working in smoky conditions, you should start stockpiling a two-week supply of N95 masks for all of your workers.

Conduct Diversity Training to Head Off Potential Lawsuits

Happy diverse people together

After R&B star SZA said she had security called on her while shopping at a Zefora store in California, the chain closed all of its U.S. stores for an hour to conduct “inclusion workshops” for its 16,000 employees.

Zefora understood the swift backlash that can hit a company that has acted inappropriately towards a customer, particularly if they are a minority. Unfortunately, Zefora is not the only company that has made the spotlight in recent years thanks to rogue employees that cross the line and harass or discriminate against a customer, co-worker, vendor or partner.

And in the age of people video-recording these encounters, a rogue employee could sink your company if the target decides to take legal action.

The second threat is the potential backlash of customers shunning your company once the word spreads on social media. This was the case with two Oregonians who ended up closing their bakery after the public backlash that followed their decision to not bake a wedding cake for a homosexual couple.

The best way for an organization to set a tone of tolerance is through diversity or inclusion training to guide them in their day-to-day interactions with co-workers, customers, partners, vendors and others. While this type of training is not mandated by any state or federal agency, it is recommended whether or not you have a diverse workforce or client base.

Implementing a diversity training program is also an important step in helping to reduce the risk of workplace discrimination and harassment claims. In settling discrimination cases, the Equal Employment Opportunity Commission often requires companies to educate employees on the importance of diversity in hiring and promotion, and how to avoid stereotypes.

A proactive employer that wants to avoid problems from the get-go would take that step without being required to.

More important than ever

Our country is becoming more diverse with each passing year. It’s not only different races and religions, but also sexual orientation and alternative lifestyles.

The norms that dictated behavior a half-century ago are transforming. To minimize the risk that employees, supervisors or managers step out of line in this new era, employers must develop an awareness of diversity within their business through appropriate training.

Diversity in the workplace is apparent in everything from our names to the types of food we eat, and long-taboo subjects are now discussed freely. People with disabilities often work alongside openly gay co-workers, and a variety of languages are spoken by employees and customers alike.

Elements of a strong training program

For diversity training to succeed, managers must find ways to integrate the training into daily tasks. It must go beyond a once-a-year training session. Here are some ideas:

Draw the line – Make it clear that intolerance is not acceptable, and that those demonstrating prejudice have no place in your organization.

Get management buy-in – Ingrain in your managers and supervisors the importance of diversity to both boost worker satisfaction and as a risk management tool to avoid lawsuits. Managers understand the personnel dynamics among the staff they manage, as well as interactions with customers.

Treat everyone with respect – Employees should be told that if they prejudge a customer or co-worker and treat them as a lesser individual, they can face be reprimanded and, if the offense is serious enough, fired.

System for handling complaints – Create procedures that all managers must follow if they receive a complaint about harassment or discriminatory behavior, or if an employee witnesses another employee treating a co-worker, customer, vendor or another person in a demeaning way.

Hold a seminar for all employees – Review what is acceptable and not acceptable, and cover all of the above. Try to focus on positives and give employees the opportunity to ask questions.

If Your Firm Is Sued for Discrimination, Act Fast to Check EEOC Complaint

discrimination-EEOC

Employers that are hit with a discrimination complaint must act fast to compare the allegations in the lawsuit to the earlier complaint the worker filed to the Equal Employment Opportunity Commission.

If the employer can find that the allegations in the complaint filed with the EEOC do not match those in the subsequent lawsuit filed by the worker, it can quickly move to have the case dismissed, but if it waits too long, it loses the chance. That’s according to a U.S. Supreme Court ruling in June 2019.

Under procedural rules, employees filing suit under Title VII Title VII of the Civil Rights Act of 1964 must first file a complaint with the EEOC.

The decision that paved the way for this new procedural rule was a unanimous U.S. Supreme Court ruling in the case of Fort Bend County vs. Lois M. Davis.

The ruling means that employers that are sued for discrimination under Title VII have a limited amount of time to challenge the lawsuit if the allegations differ in any way from the original EEOC complaint. If they act fast, then they stand a good chance of convincing the court to throw out the complaint.

However, if an employer dawdles and waits too long to challenge the case if they find a discrepancy, they may lose the opportunity.

If the employer in this case had acted quickly, it would never have gone to the Supreme Court, legal experts say.

The case details

An IT worker in Texas had reported that her director was sexually harassing her, and after an investigation he was fired. But after that, her supervisors began retaliating by cutting back on her work responsibilities. She filed a charge with the EEOC and, while the charge was pending, she was told to report to work on a Sunday. She refused and went to church instead.

She tried to supplement her allegations and wrote the word “religion” by hand on her EEOC intake questionnaire, but she didn’t change her formal charge document by adding that word.

The case went to trial and was appealed, and then it was sent back to the local U.S. District Court to decide the remaining charge of religious discrimination. The case had been in the courts for three years at that point.

That’s when her former employer asserted that the District Court didn’t have jurisdiction of the case because she had failed to state the claim in her EEOC charge papers. That issue was taken all the way to the Supreme court, which wrote in its decision that an objection to a charge because of a discrepancy may be forfeited “if the party asserting the rule waited too long to raise the point.”

The takeaway

If your organization is the target of a discrimination lawsuit, make sure to check the original EEOC charge for any discrepancies. If there are any, you can consult with your lawyers about filing a motion to have the complaint dismissed.

Why Your Business May Need Pollution Insurance

pollution

Many businesses that produce some type of pollutant throughout the course of daily business operations don’t know they are doing so.

Others know they are producing pollutants and have processes and safeguards in place to reduce their release into the environment. A business can be held liable for some very costly damages when these byproducts pollute another property or harm another individual.

Pollution liability clauses were once part of general liability policies, but the extensive asbestos problems in the 1970s spurred most insurers to remove pollution protection from their general liability policies.

Today, pollution liability coverage is obtained through a separate pollution insurance policy. Pollution insurance policies are written for businesses of all sizes, shapes, and forms – from pig farms and printers to apartment complexes, salons, and dry-cleaning businesses.

Why pollution insurance?

Many businesses run the risk of creating pollution during normal daily operations.

There’s also a risk from any existing pollution already on a business’s site of operation. In either case, a business could be held liable if its pollution ends up on a third party’s property, causes damage to the property or harms an individual.

Without insurance, the business would be on the hook for paying for those damages out of pocket.

What do policies cover?

The basic premise of a pollution policy is that an insured party gets a claim related to damages caused by pollution it caused.

This insurance will protect your financial interests in the event a clean-up becomes necessary. Buying pollution liability insurance will cover your interests against lawsuits where a third party could be injured by a toxic substance produced as a result of your work.

Like most types of insurance, the specifics of a pollution policy can vary somewhat from insurer to insurer.

Depending on the insurer, a pollution policy will typically cover

  • Damage to properties and individuals
  • The cost of cleaning up pollution on a third party’s property
  • Pollution incidents that occurred after the policy was
  • Investigative, legal, and court costs should the claim enter the legal system.

Who needs coverage?

Businesses that have risks related to the handling of pollutants and hazardous materials, design professionals who work with projects where there are environmental issues, as well as those who own and occupy premises that have environmental issues, need pollution liability insurance.

This includes:

  • Property owners and tenants whose buildings and land have a history of having pollutants on the property or premises. This would include a building on land that had an underground storage tank that leaked fuel oil before it was removed, contaminating the soil.
  • Contractors such as roofers who handle pollutants like tar as a part of their operations need contractors pollution liability insurance to cover damage resulting from a pollution incident.
  • Architects and engineers who are involved in projects that have issues related to pollutants need to add pollution liability to their errors and omissions insurance policy to manage the risk of making a mistake regarding the presence or absence of pollution issues as they plan and execute a project.

The takeaway

Don’t overlook pollution insurance as an important element of risk management. Should any questions or concerns about pollution insurance and insurance requirements arise, call us.