This year, Legionella outbreaks created a media frenzy in New York City and Chicago with an ongoing case in Bronx, New York. According to the Center for Disease Control and Prevention (CDC) there are as many as 18,000 hospitalized legionella cases a year and the Occupational Safety and Health Administration (OSHA) approximates 4,000 deaths per year. The disease was named after the first known outbreak at a Philadelphia hotel where an American Legion convention was held and killed 34 people in 1976. Over the years, other significant outbreaks have occurred in Atlanta and Pittsburg hospitals, casinos in Las Vegas, and the Playboy mansion in Los Angles.

Legionella is a bacteria usually found in water and thrives in temperatures of 68 degrees – 120 degrees Fahrenheit. While there are almost 50 species of Legionella, not all are harmful. Legionella pneumophila is considered the most dangerous as it causes 90% of the cases of infection. It’s often found in hot water tanks, large plumbing systems, hot tubs, cooling towers, and decorative fountains. People contract the disease by breathing in a mist/vapor containing the bacteria. When these mists or vapors are contained in confined spaces or enclosed rooms, they may become more concentrated and have more of an ability to affect people. This situation often happens indoors, which is why this can be considered an indoor air quality problem. Many healthy people do not contract the disease and it is not spread person to person. People at a higher risk include: People over 50, those with a weak immune system, and current or past cigarette users. Pneumonia like symptoms (muscle aches, high fever, headaches, cough, and shortness of breath) are usually the first symptoms of this disease and start within 2 to 10 days after being exposed to the bacteria.

The disease is increasing due to a number of factors

• Deteriorating infrastructure of buildings and facilities, including pipes, water treatment facilities, boilers, and cooling towers.
  
• Climate change: higher than average temperatures allow for the bacteria to thrive.  More flooding events will also create a breeding ground for the bacteria.  
  
• Building regulations: newer “green” building regulations are reducing hot water boiler temperatures. While these lower hot water temperatures decrease energy consumption and lower the risk of scalding, this creates an environment more suitable for the bacteria to thrive.
  
• Increased public awareness and more sophisticated methods of testing for the bacteria. This will lead to more claims for business owners as there may be more opportunities to link site conditions, exposure, and disease.

The risks of Legionella to businesses

• Bodily Injury: physical injury, sickness, disease, mental anguish/emotional distress, and even death. The primary financial costs to a business affected by Legionella are the costs associated with Bodily Injury claims. The CDC estimated over $300,000,000 in medical costs alone annually. According to the EPA, the value of a human life in the U.S. was valued at over $9 million.   
  
• The cost of source investigation/cleanup/restoration/monitoring. (Costs can exceed $30,000 to detoxify just one cooling tower).
  
• Negative publicity and stigma attached to business.
  
• Business income interruption (an example would be a water tower taken off line).
  
• Legal/defense costs for the source location, as well as the other properties or businesses it affected. In some instances, environmental regulatory agencies or health departments may assess fines against these businesses also.
  

Insurance may be the answer

There are a number of specialty insurance companies that can offer some level of protection. Premises Pollution coverage (also called Environmental Impairment Liability) is a policy that covers 3rd party liability for pollution incidents at/on or emanating from covered locations. In addition to Bodily Injury and 3rd party property damage coverage, clean up coverage for pollutants--both on and offsite--may be included. Defense coverage is usually within the policy limits and deductibles/retentions can be as low as $5,000. Policies are not limited to named perils but it’s important to review exclusions and coverage definitions within the policy forms. There are carriers that explicitly include Legionella in the definition of a pollutant, while others may offer coverage for all bacteria. If a carrier is offering coverage for microbial matter, however, it is important to be sure that Legionella and/or bacteria coverage is included in the definition of microbial matter. Under some policy forms, mental anguish may be included in the definition of bodily injury without the restriction of being tied to actual physical injury. In other policy forms, mental anguish does not have to be tied to physical injury.  Carriers may offer on-site cleanup for Legionella bacteria, however, in some cases the coverage may be restricted to a demand from a governmental body. An insurance broker should find a carrier willing to offer a policy that the insured can trigger themselves (i.e. first party discovery trigger).  

Forward thinking insurance companies may offer loss control services and guidance in implementing,  monitoring, and preventative maintenance plans against Legionella and other indoor air quality exposures. Should an outbreak occur at a facility, a select few carriers can include crisis management services that offer assistance with media interactions and public relations. Purchasing insurance from a carrier providing this service may reduce the overall costs of claims the stigma associated with Legionella outbreaks.

As more insurance companies enter this marketplace it is easy for property owners/managers to obtain pollution coverage pricing, especially for indoor air quality issues. Many underwriters offer indications from Property ACORD information and property and General Liability loss runs. Minimum premiums can start as low as $3,000 annually with limits as low as $1 million dollars. It is important that insurance representatives be comfortable reviewing the policy forms and endorsements as no two policies are the same. With the increasing risk of liability, and the decreasing rates from the insurance markets, now is a good time to seek insurance protection for this indoor air quality risk.

SOURCES:

http://www.cdc.gov/legionella/index.html

http://www.nytimes.com/2015/08/17/nyregion/order-to-clean-towers-strains-crews-amid-legionnaires-outbreak-in-bronx.html?_r=0