Volatile Organic Compounds: The Silent Threat You Need to Know About and How Environmental Insurance Can Help

In the realm of insurance, there’s a unique opportunity that combines the responsibility of safeguarding businesses with a profound commitment to protecting our environment. This opportunity revolves around Volatile Organic Compounds (VOCs) and the insurance solutions designed to mitigate the risks associated with them.

VOCs, as defined by the Environmental Protection Agency (EPA), are ubiquitous in our surroundings. They’re found in a wide spectrum of products that we encounter in our daily lives – products as diverse as fuel oils, solvents, cleaning supplies, paints, inks, dyes, refrigerants, and pesticides. Releases can include gases that are emitted into the atmosphere or a spill that seeps into the ground, and either remains only in the soil or eventually migrates into the groundwater.  

In this article, we will delve deep into the inherent risks associated with VOCs, explore the impacts they can have on both businesses and the environment, and, most importantly, discover how Environmental Insurance for VOCs can help.

Health Effects from VOCs

The EPA lists the following as potential health effects from exposure to VOCs:

• Eye, nose, and throat irritation
• Headaches, loss of coordination, and nausea
• Damage to liver, kidney, and central nervous system
• Potential cancer in animals from some organics (some are suspected or known to cause cancer in humans as well)

Key signs or symptoms associated with exposure to VOCs include:

• Conjunctival irritation
• Nose and throat discomfort
• Headache
• Allergic skin reaction
• Dyspnea
• Declines in serum cholinesterase levels
• Nausea
• Emesis
• Epistaxis
• Fatigue
• Dizziness

How VOCs Are Emitted

Dry cleaners have been associated with VOCs due to their use of tetrachloroethylene, also known as perchloroethylene, PCE or PERC. PERC is a reproductive toxicant, neurotoxicant, potential human carcinogen, and persistent environmental pollutant that is still used today by some dry cleaners. When PERC is disposed of, it can seep into soils and subsequently migrate into groundwater, forming a plume that may impact nearby apartment complexes, office buildings, or strip malls. Although the dry cleaner is ultimately responsible for the pollution event, the neighboring complexes, offices, and shops will more than likely incur investigative costs and potential third-party claims from tenants due to the exposure.

VOCs can also be released into the air during manufacturing processes, where emissions can occur through leaks, spills, inadequate ventilation systems, or improper handling and storage of solvents. Mishandling or accidental spills of solvents can lead to large-scale releases of VOCs into the environment, including impacts to soil, groundwater, and surface water, which can pose risks to ecosystems and potentially impact drinking water sources. Improper disposal of waste containing VOCs can also contribute to pollution. If a manufacturer disposes of solvent-containing waste improperly, such as by dumping it into water bodies or landfills without appropriate treatment, VOCs can leach into the environment and contaminate soil and water resources.

A warehouse with a fueling station for its trucks or heating oil at the site also has a pollution liability exposure related to VOCs.

Real-Life Claims Scenarios

Chemical Manufacturer

A chemical manufacturing plant caught fire, emitting hazardous vapors into the air and hazardous liquids into the soil and groundwater. The air vapors and groundwater migrated to a number of third-party properties. The neighboring community filed a class-action lawsuit for property damage and bodily injury. In addition to these third-party claims, the owner of the manufacturing plant incurred extensive costs to clean up surrounding properties as well as the site itself. Total costs from the class-action suit and cleanup costs exceeded $5 million.

Previous Dry Cleaner/Current Strip Mall Owner

A dry cleaner in a strip mall filed for bankruptcy, leaving behind contamination in the soil and groundwater, which led to an indoor air issue from soil vapor. The property/strip mall owner was responsible for the cleanup and was required by the state regulatory agency to complete the site cleanup and notify surrounding property owners of the contamination, which had migrated off-site. Cleanup costs and subsequent lawsuits from adjacent property owners exceeded $800,000.

Pollution Legal Liability Insurance for VOC Exposures

Distinguished provides Pollution Legal Liability insurance for specific classes of business to protect against VOC risks. Our classes include multi-family residential, hospitality, commercial office buildings, airports, warehouse/distribution facilities, healthcare facilities, environmental facilities, manufacturing facilities, redevelopment properties, brownfields, and agricultural facilities.

VOC insurance coverage is provided for both sudden and gradual pollution events, including cleanup costs, legal expenses, and third-party claims for new and/or historical pollution conditions on, at, under, or migrating from or through a covered location or an indoor contamination condition at the insured’s location. Our policy also provides coverage for mortgage protection, diminution in value, business interruption, non-owned disposal sites, transportation of an insured’s wastes or products, and contracting services.

The program includes limits up to $25 million/$25 million, with policy terms up to 10 years.

Added Value with Distinguished

In-House Underwriting, Claims Management, & 24/7 Response Team

Our team of underwriters, engineers, geologists, environmental scientists, and insurance professionals has more than 300 years of combined environmental, construction, and insurance-related experience, allowing us to provide solutions tailored to protect businesses from their unique environmental and professional exposures. We can provide a full range of products to cover fixed facilities, contracting services, and professional liability with both primary and excess capabilities by applying a customer-focused approach and cutting-edge systems.

We work with Cura to offer our insureds emergency response services 24 hours a day, seven days a week. Cura provides spill response management in all 50 states. Experienced incident managers will send an approved contractor to the spill site at pre-negotiated rates, coordinate the cleanup, handle any regulatory notifications, dispose of waste, audit all bills, and perform interim and final reporting for our insureds.

Our in-house claims team is composed of experienced attorneys who are committed to resolving environmental, construction, and professional-related claims in a timely and effective manner.

How to Submit Business

1. Register your agency if not already registered.
2. Fill out appplication
3. Complete and submit to Douglas Stepenosky, via email: dstepenosky@distinguished.com.

About Distinguished Programs

Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Fine Art and Collectibles, Environmental and Construction Professional, Executive Lines, Inland Marine, Real Estate & Builder’s Risk, Community Associations, Surety, Hotels, and Restaurants. Property and Liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished’s high-limit Umbrella programs remain the clear choice in its area of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.

View a full list of our programs and submit business with Distinguished.

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