Pollution liability protection is a specific type of insurance coverage that generally covers the costs that can come with claims of harm or damage to the environment. These claims are often connected to allegations of improper disposal of hazardous waste materials and can occur in many types of business operations, such as construction and biotech.
How do these claims work?
Although environmental claims are complex there are some that are clearer than others. In a recent example of a relatively clear environmental claim a city accused a steel company of air pollution violations. The city claimed the company exceeded acceptable limits for lead emissions. This led to hundreds of thousands in civil penalties and a requirement to reduce lead emissions in the future. The emission of hazardous waste in cases such as this could also result in third-party bodily injury or property damage claims. Pollution liability insurance coverage can help cover the astronomical costs often associated with the defense and settlement of these kinds of alleged losses.
Other cases are less clear. For example, there are instances when California considers noise a harmful pollutant. State courts have interpreted a portion of the California Environmental Quality Act to essentially extend the definition of hazardous waste to include noise. The move has gained traction, and at least one case was successful in using this argument to shut down a housing development. It is possible that a third party could claim bodily injury as a result of the noise. The case is currently on appeal and heading to the California Supreme Court. Although it may seem like an abstract argument, it provides two important reminders for all types of businesses. First, be aware that federal law is only part of the equation as both state and local rules can also impact your business’s operations. Second, the laws that guide business operations are always evolving.
What if the insurer does not pay?
Even when entrepreneurs have coverage in place, disputes over claim denials or a failure to provide full coverage are common. In some cases, aggressive negotiation tactics can lead to payment while others may require litigation. In either situation, business owners are wise to seek legal counsel to advocate for their interests and better ensure they receive their fair due.