Posted in Environmental / Construction Professional and Pollution Insurance

Groundwater Pollution Insurance: Why Every Site Needs It

August 10, 2023 / Distinguished

Water is all around us. It falls from the sky, collects in ponds and streams, and makes up around two-thirds of our planet’s surface. However, in the US, around 38% of our drinkable water is hidden from sight, residing deep underground in ancient aquifers and basins.

Just because we cannot necessarily see these water sources does not mean that they are not vulnerable. When pollutants leach into groundwater, the result can devastate local communities, as property can be damaged and people injured.

For this reason, carrying an environmental insurance policy that includes coverage for groundwater impacts is critical for site owners and contractors. Even when all safeguards are taken, mistakes can happen. Pollution insurance for groundwater impacts helps your clients cover remediation and liability bills likely to come their way if they are unlucky enough to deal with a groundwater pollution issue.

Why Do Sites Need Groundwater Pollution Insurance?

Sites need pollution insurance that considers groundwater impacts because even a single incident can cost your client hundreds of thousands of dollars.

Here are a couple of theoretical examples based on real-life instances where coverage for groundwater impacts would benefit a site owner.

Redevelopment Derailed By Contamination

During a routine redevelopment of a former industrial complex, it was discovered that there were several underground storage tanks leaking pollutants into the soil and nearby waterway. Previous environmental studies did not pick up on the contaminants, so it was the responsibility of the new site owner to clean up and monitor the site until the state regulatory agency gave them the go-ahead to continue with the redevelopment.

In the end, the cost of cleaning up this site was more than $1,000,000. Despite this not being the site owner’s fault, they would have been responsible for this bill had they not had pollution insurance with coverage for groundwater impacts.

Waste Oil Accident Leads to $3,000,000 Cleanup

No matter how careful operations at a site are, human error or happenstance can always cause incidents that can cascade into major problems. In this case, a valve in a waste oil container’s secondary containment system was accidentally left open after a routine check. Unfortunately, the operator overfilled the container, and with the valve open, the runoff entered local waterways and groundwater, affecting the ecosystem, animals, and nearby residents.

The cost of this mistake was around $3,000,000. The costs included the price of the emergency response, the cleanup, and property damage caused to residents.

Former Tenant’s Actions Lead to Legal Action and Cleanup Costs

After taking over a warehouse complex, local agencies contacted the new site owner, saying that runoff from their site was causing groundwater issues in other areas.

After looking into the matter, the owner discovered that the previous tenant had not followed pollution best practices. While the owner tried to sue the former tenant for the damage they caused, the owner still had to pay out of pocket for cleanup costs and legal bills. All told, the incident resulted in costs of over $1,000,000.

Who Needs Pollution Insurance?

For the most part, pollution insurance is something that will appeal to your site owner clients. Not only do site owners need to worry about their site causing a pollution event, but they also need coverage in case an existing groundwater pollution issue migrates through their site.

Depending on the contractor, they may also need this type of coverage. Although they do not need to worry about incidental or historical contamination, they still do need insurance in case they or one of their subcontractors causes a new pollution event or exasperates an existing one.

What Does Groundwater Pollution Insurance Cover?

Distinguished’s pollution insurance is a specialized environmental insurance policy designed to cover sites and contractors in case of groundwater pollution events impacting an owned location or a job site. With this kind of insurance, a site would be covered for the following:

Remediating historical sources: If your client uncovers a groundwater contamination source that had already been present on their site, this policy will help them cover the costs of cleanup and remediation.
Cleanup costs: Should your client accidentally cause groundwater contamination, this policy would help cover things like source removal, site remediation, and more.
Liability claims: If a groundwater incident results in legal action against your client, this coverage would help pay for those costs, including legal defense and damages.
Bodily injury: Damages caused to nearby property owners due to the contamination would be covered under the policy.
Property damage: The policy covers damages caused to third-party property from groundwater contamination.

As for what specific pollutants Distinguished will cover, it comes down to very site-specific circumstances. We would first need to review site data to give you the specifics of your client’s situation. If you have specific questions about your client’s situation, please feel free to contact us at DStepenosky@distinguished.com.

Why Partner With Distinguished For Groundwater Pollution Insurance?

Pollution insurance is both critical to sites and incredibly site-specific. That is why it is so important that you partner with experts in this field, like those here at Distinguished.

At Distinguished, we have years of experience in this field, so we know what protections and limits your clients need. Plus, we offer a series of specialty Environmental and Construction Professional policies, so we can ensure that your client’s site is covered in the event of an environmental or pollution incident.

When you partner with Distinguished, you can offer your clients more than just an insurance policy. You can also give them:

Expertise: Our dedicated Environmental and Construction Professional Insurance team has years of industry experience. This wealth of knowledge lets us offer insurance solutions tailored to each client’s needs.
Quick Quotes: Our experienced team strives to deliver bindable quotes to you as swiftly as possible. We typically provide a quote in three days, although expedited options can be arranged in certain situations.
Flexible Coverage Options: Our seasoned underwriters can modify policies to evolve with your client’s changing needs so that they always have coverages and policies that make sense for them.
Superior Claims Handling: Distinguished has a dedicated, in-house team of expert attorneys who handle claims efficiently and fairly. Our top-notch claims handling helps clients feel at ease, knowing they are well-protected and in good hands during difficult times.

How to Get Started With Distinguished

Get your clients the coverage they need with Distinguished’s Environmental and Construction Professional Insurance policies. Our experts have over 300 years of shared experience, so you can trust us to get you a policy that’s just right for your client’s specific needs.

Getting started is easy. First, sign your agency up with Distinguished. Next, fill out an application form and email it to our program head, Doug Stepenosky, at DStepenosky@distinguished.com.

Check out the links below to see the full range of insurance policies we can offer your clients.

Distinguished’s Groundwater Pollution Insurance FAQs

What is the most common groundwater impact?

The most common groundwater contamination sources we see come from volatile organic compounds (VOCs) and herbicides/pesticides.

What industries are most commonly responsible for groundwater impacts?

Contamination can come from all kinds of industries. However, here are some of the most common ones we see:

Automotive industries: Issues with bulk storage containers could leak different solvents used in cleaning and manufacturing into the groundwater supply.
Dry cleaners: The chemical PCE was once commonly used in dry cleaning and can still pose a threat if disposed of improperly.
Gas stations: Leaks from any of the multiple large underground storage tanks at these sites can cause groundwater problems.
Manufacturing sites: Most commonly caused by hazardous materials storage and the solvents used for cleaning machinery.

What groundwater impacts are hardest to clean up?

The most difficult contaminants to clean up are chlorinated volatile organic compounds (CVOCs), such as PCE and TCE, because they are heavier than water and therefore sink.

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, 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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