If you own property, you’re at risk for environmental issues. Many choose to ignore this risk, but understanding and addressing it is crucial. Most people blame insurance companies for not covering such claims instead of taking steps to protect their assets.
Thanks to insights from United Commercial Program Managers (UCPM), we aim to simplify this complex topic and present solutions for safeguarding your property from environmental claims.
Environmental Risks for Property Owners:
Office buildings, apartment complexes, Homeowners Associations, and other real estate owners face significant liability for environmental contamination, even if it’s not directly caused by them. Laws like CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act) are becoming stricter, limiting defenses and increasing costs. Property owners can be held liable for contamination caused by tenants and previous occupants, affecting both commercial and residential properties.
Key Environmental Concerns:
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Bacteria: Legionella, mold, and fungi can spread through water sources, causing serious health risks.
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Lead: Found in paint and pipes, lead can contaminate drinking water, leading to severe health issues.
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Asbestos: Often present in older buildings, improper handling during repairs can lead to dangerous exposure.
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Chemicals: Misuse or spills of pool chemicals, pesticides, and fertilizers can create health hazards and require costly clean-up.
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Waste Management: Residential associations must properly dispose of hazardous waste, such as fluorescent bulbs, to avoid liability.
Environmental Pollution Liability Insurance Protects Against:
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On-site and off-site cleanup of pollution
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Third-party injury and cleanup claims
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Storage tank issues
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Business interruption due to pollution
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Mold, bacteria, and virus-related claims
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Defense of claims and natural resource damage
Real-World Examples:
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Legionnaires’ Disease: Residents sued an apartment complex owner after contracting Legionnaires’ disease from contaminated water.
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Toxic Mold: A condo association settled for $545,000 after families sued over health issues from toxic mold.
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Roof Leaks: A woman received $350,000 after mold growth from chronic water damage caused health issues.
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Dangerous Fungus: A building owner faced over $1 million in claims due to fungus spread during ductwork removal.
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Carbon Monoxide Leak: A faulty valve caused a carbon monoxide leak, sickening 23 women in an apartment building.
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Fertilizer Runoff: Fertilizer applied at an apartment complex migrated to a neighboring pond, costing over $50,000 to restore.
Standard insurance policies often exclude these types of claims, meaning property owners are left to cover defense costs and judgments themselves. Considering environmental insurance is essential for a comprehensive insurance portfolio.
About the Author:
Stan Dreckman is the President of Huggins Dreckman Insurance Agency, Inc., specializing in insurance for landlords, apartment buildings, and commercial real estate. This article incorporates information from UCPM, a specialty environmental insurance provider. Stan Dreckman can be reached at 562-594-6541 x1500 or . Visit www.hdinsure.com for more information or email questions to .
