Of the coverages for manufacturing businesses, pollution liability may be the most unique and most difficult to define. It begs questions such as…
What event triggers a claim?
Regarding airborne pollution, how do you determine the cause-and-effect relationship?
When does the company face a ‘strict liability’ exposure?
Below outlines 5 unique and fundamental traits that characterize environmental loss exposures, and how they specifically relate to manufacturers:
- Environmental loss exposures are difficult to identify and measure because they arise from past activities: An adjuster or an environmental agency has a hard time quantifying a chemical pollution claim occurring in prior years. When precisely did the pollution begin? Were there activities that, over time, increased or decreased the pollutant release?
- Lack of cause-and-effect relationships make causation and liability hard to establish: A person might living near a chemical plant might contract a disease that can be linked to factory emission. Is that enough to hold the manufacturer liable? Are there other links within that persons lifestyle or genetics to the contracted disease?
- Claims may arise from perceived exposures or from fear of future injury: If a plaintiff successfully settles for alleged injury related to the manufactured product, another patron could easily take the same course of action.
- Environmental laws impose strict liability and multiple damages: Even if no bodily injury or property damage occurs, a manufacturer could get in trouble with an environmental agency. That situation could lead to penalties, fines, or hefty cleanup costs.
- Damage increases over time as contamination spreads: If a harmful chemical disperses in soil, groundwater, or running water, the damage will increase as the substance influences a greater geographic area. Hence, a claim scenario intensifies as time goes by.