Industrial Sites: An Exposure Discussion for Agents and Their Clients
Toxic materials, pollution releases, and chemical storage— A facility needs to carefully review all of their exposures, and what they can do to prevent pollution accidents from happening.
When considering the spectrum of exposures for industrial operations, it is important to assess the environmental exposures the actually facility has. Environmental impacts can be insidious, often occurring over long periods of time and not being discovered until sometime in the future. Given the long-term nature of environmental risk—and the significant costs associated with responding to it—constructing the correct coverage program today is an important part of risk management.
Industrial facilities are home to processes that often involve toxic and potentially harmful materials. Whether it is the material being manipulated by the industrial process, or substances utilized to support these processes, there are a wide range of exposures to be concerned with.
It is important to understand the ways the environment can be impacted by operations at industrial facilities. One of the first to consider is airborne contamination. The release of fumes, smoke, vapor, or soot from a facility is a potential pollution loss. And if that airborne material settles onto a neighboring property’s buildings or open bodies of water, there can be significant offsite clean up required, not to mention potential bodily injury. Many losses of this type happen when permitted releases exceed the guidelines of the permit, often through faulty equipment.
Another direct pollution loss is the release of a toxic substance that either runs along the property and into unprotected soil or water, or leaches directly into the soil. This type of pollution release, potentially occurring incrementally over years, can have the most long-term damaging effects. Cleanup costs, third party responsibility for Bodily Injury, Property Damages, Natural Resource Damages, and Diminution of property values can add up very quickly.
Industrial facilities also have a waste storage and disposal issue. Waste by products of their manufacturing need to be properly contained and disposed of, creating liability for the facility owner. Coverage for those Non-Owned Disposal Sites they transport waste to is important to consider.
With all of these possible ways industrial facilities can impact the environment, the next question is: what substances do industrial properties have that could be released in one of these ways? The materials being manipulated in their processes would be the first thing to consider. Blending chemicals, recycling waste oil, processing crude, lacquering furniture, and more are all examples of what could be of concern. In addition to these, the fluids, fuels, solvents, and other materials used to maintain the equipment that operates at the facility are all potential contaminants that could be released into the environment. Oil, antifreeze, lubricants, etc. need to be stored and handled properly to prevent releases.
The proper storage of all hazardous or toxic substances is of paramount importance, as is having robust protocols in place to handle unforeseen emergencies. The Arkema plant fire in Texas during hurricane Harvey serves as a warning about how quickly things can go wrong.
A facility needs to carefully review all of their exposures, and what they can do to prevent pollution accidents from happening. Good plant safety and management allows the agent to help the client purchase insurance to protect for the day things don’t go according to plan.
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