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Who Buys It
General contractors working in the commercial, residential and municipal construction industry often purchase pollution liability insurance, as do contractors engaged in building roads and sewers; performing maintenance, demolition and excavation; and working at industrial facilities. Remediation contractors might need to purchasing this type of insurance in case they find a new source of contamination while cleaning a contaminated site. Other businesses that may need pollution liability insurance include "airports, pig farms, storage yards, fueling facilities and composting firms," according to InsuranceAgents.com.
What It Covers
Pollution liability insurance usually covers injury to third parties, such as neighbors harmed by a release of toxic substances. It may also cover damage to property, such as an oil spill on a property near a road. Some policies cover legal fees for contractors who face lawsuits
for pollution-related incidents, or the cost of cleaning up a site after a pollution incident.
The Rise of Pollution Insurance
For years, "a business' major environmental concern was being named partly responsible for polluting a site and ended up snarled in years of Superfund litigation," according to Pollution Engineering. But over the decades, society became more aware of pollution hazards, and cleanup costs became more expensive. Many insurance companies began excluding pollution hazards from their policies, forcing companies to buy additional insurance to cover this risk.
Coverage Limits and Deductibles
Policies can cover as little as $1 million and as much as $50 million in risk, with typical policies covering between $5 million and $10 million. Deductibles, or the amount of money a contractor must pay before insurance begins paying out, range from $10,000 to $1 million.