What Is Pollution Insurance?

Many companies produce pollution in the course of their business. When those materials pollute another property, that is considered damage. Standard general liability policies excluded pollution from coverage in the 1980's. Those liabilities are now covered under pollution insurance policies. Common for many businesses that don't seem related to creating pollution, policies are written for such diverse concerns as apartment complexes, prisons and pig farms.

How do these policies work?

• Pollution insurance policies will vary based on who writes the policy and the specifics of the policy. In general these policies follow a claims-made and reported format. This means that the claim is made to the insured party. Then the insured reports the claim to the insurance company. The basic principle is that damage caused by pollution to another individual's property is covered by the policy. Also, any clean-up fees are often covered. Another important stipulation among some policies is that damage or harm to individuals is covered as well as damage to property. Some policies also provide that the insurance company will investigate the incident and defend the insured individual in court if necessary. A vital distinction to keep in mind is whether the policy covers existing pollution or only incidents that occur after coverage.

Why are the Policies Needed?

• In a number of instances there may be existing pollution at a property site. That existing pollution may under certain circumstances find way into adjacent properties, causing damage. The creation of new pollution during "normal" operation may also exist. Property damage and harm to individuals caused by the pollution created may be a liability that the party considers best covered by an insurance policy. The details of the situation will ultimately help to make the decision, and some situations may require pollution insurance.

What do the Policies Cover?

• What the policy covers is determined by the individual policy. Each policy may be different, and you should consult the text of your individual policy. In general, many policies will cover clean-up costs of pollution that is contaminating another property. These policies usually cover damages caused by pollution that are awarded to individuals and properties. Many policies also cover the cost of investigating the claim that has been filed and defending against the claim if it reaches the courts. Other specifics may be negotiated, and not all of these may be included in a single policy. Another important distinction is whether the policy covers existing pollution, and that too depends on the individual policy.

Who should I contact about a policy?

• Who you contact will be determined by where you are and what you want to know. Depending on your location there are some government agencies that have information that may be helpful. There are also some areas where the government supplies pollution insurance policies. A number of larger insurance agencies also offer policies and contacting them directly should be an effective way to get details about the specifics of their policies. Some states have their own pollution insurance programs. Washington State has such a program through the PLIA (Pollution Liability Insurance Agency). Other states do as well. You can find information for your state by contacting your local environmental agency.

What should I keep in mind?

• Find out about what insurance is required in your situation. From there determine the amount of risk that you or your company can carry. These will be good starting points for determining what sort of policy you need. You should also have a quality assessment of the property you are considering insuring. There is always help. If you have any questions contacting a knowledgeable individual is a good idea. You can learn some of the options by visiting sites of pollution insurance providers, such as International Amalgamated.