OUT OF THE ORDINARY INSURANCE

ENVIRONMENTAL INSURANCE FOR MANUFACTURING & INDUSTRIAL FACILITIES

MANUFACTURING AND INDUSTRIAL FACILITIES CAN HAVE SOME OF THE MOST SERIOUS FIXED-SITE ENVIRONMENTAL LIABILITY EXPOSURES IN THE COMMERCIAL INSURANCE MARKET. IF YOUR OPERATION STORES CHEMICALS, USES PROCESS FLUIDS, GENERATES WASTE, OPERATES TANKS, OR HAS A SITE HISTORY THAT COULD CREATE CONTAMINATION ISSUES, ENVIRONMENTAL INSURANCE IS NOT A SIDE TOPIC.

FACILITY RISK BUILDER LOSS PATHWAYS EXPOSURES RELATED PAGES FAQS
EXPOSURE POINTS IN A TYPICAL INDUSTRIAL FACILITY
CHEMICAL STORAGE
PROCESS FLUIDS
WASTE STREAMS
STORAGE TANKS
DRAINAGE & DISCHARGE
HISTORICAL CONTAMINATION
AIR EMISSIONS & DUST
SOIL & GROUNDWATER
BOOK AN APPOINTMENT CONTACT US TODAY CALL / TEXT (412) 212-2800
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MANY INDUSTRIAL OPERATIONS HAVE STRONG CORE PROPERTY AND LIABILITY PROGRAMS — AND STILL HAVE A WEAK ENVIRONMENTAL POSITION. ENVIRONMENTAL LIABILITY FOLLOWS ITS OWN LOGIC, ITS OWN LOSS PATH, AND ITS OWN COST STRUCTURE. A LOSS MAY INVOLVE TECHNICAL, LEGAL, REGULATORY, AND PROPERTY VALUE CONSEQUENCES ALL AT ONCE — AND THE CLEANUP ISSUE MAY NOT BE TREATED THE WAY THE INSURED EXPECTS.
THIS PAGE IS FOR

MANUFACTURING FACILITIES, INDUSTRIAL OPERATIONS, FABRICATION PLANTS, PROCESSING FACILITIES, CHEMICAL-RELATED INDUSTRIAL OPERATIONS, FACILITIES WITH STORAGE TANKS, INDUSTRIAL PROPERTY OWNERS, OWNERS OF HEAVY COMMERCIAL OR INDUSTRIAL SITES, AND BUYERS OF INDUSTRIAL PROPERTIES.

A DEEPER ENVIRONMENTAL STORY

MANUFACTURING AND INDUSTRIAL FACILITIES OFTEN HAVE A DEEPER, OLDER, AND MORE COMPLEX ENVIRONMENTAL STORY THAN ORDINARY COMMERCIAL PROPERTIES. THE EXPOSURE IS NOT GENERIC PROPERTY LIABILITY. A LOSS MAY DEVELOP FROM CURRENT OPERATIONS, PAST OPERATIONS, POOR STORAGE, TRANSFER ISSUES, TANK PROBLEMS, OR FACILITY CONDITIONS THAT WORSEN OVER TIME.

WHY STANDARD COVERAGE FALLS SHORT

THE CLEANUP ISSUE MAY NOT BE TREATED THE WAY THE INSURED EXPECTS. THE THIRD-PARTY CLAIM MAY FOLLOW A DIFFERENT PATH THAN THE SITE CONDITION. INDUSTRIAL ENVIRONMENTAL LOSSES REQUIRE THEIR OWN REVIEW — NOT AN ASSUMPTION THAT PROPERTY AND GL WILL COVER WHAT MATTERS MOST.

FACILITY RISK PROFILE BUILDER

WHAT DOES YOUR INDUSTRIAL FACILITY INVOLVE?

SELECT EVERY ELEMENT THAT APPLIES TO YOUR FACILITY OR SITE. THE TOOL BUILDS A REAL-TIME RISK PROFILE SHOWING HOW MANY EXPOSURE POINTS YOUR OPERATION HAS — AND WHAT THAT MEANS FOR YOUR ENVIRONMENTAL INSURANCE CONVERSATION.

SELECT ALL THAT APPLY TO YOUR FACILITY
MATERIALS & STORAGE
OPERATIONS & WASTE
SITE HISTORY & STATUS
MATERIALS & STORAGE
0 / 10
OPERATIONS & WASTE
0 / 8
SITE HISTORY & STATUS
0 / 11
SELECT THE ELEMENTS THAT APPLY TO YOUR FACILITY TO BUILD YOUR ENVIRONMENTAL RISK PROFILE.
LOSS PATHWAYS

HOW INDUSTRIAL ENVIRONMENTAL LOSSES ACTUALLY DEVELOP

INDUSTRIAL ENVIRONMENTAL LOSSES DON'T ALWAYS START WITH A DRAMATIC INCIDENT. THEY OFTEN DEVELOP SLOWLY — AND BY THE TIME THEY ARE VISIBLE, THE DAMAGE IS ALREADY DONE. SELECT A LOSS PATHWAY TO SEE HOW A SPECIFIC TYPE OF INDUSTRIAL ENVIRONMENTAL LOSS UNFOLDS.

PHASE 1

SLOW TANK LEAK BEGINS

A STORAGE TANK DEVELOPS A SMALL LEAK — POSSIBLY DUE TO CORROSION, JOINT FAILURE, OR FITTING WEAR. THE LEAK IS TOO SMALL TO TRIGGER ALARMS OR VISIBLE SPILLAGE. THE FACILITY OPERATOR IS UNAWARE.

PHASE 2

SOIL CONTAMINATION SPREADS SILENTLY

OVER WEEKS OR MONTHS, THE LEAKED MATERIAL SATURATES SURROUNDING SOIL AND BEGINS MIGRATING TOWARD GROUNDWATER. THERE IS STILL NO VISIBLE SURFACE EVIDENCE.

PHASE 3

DISCOVERY TRIGGERS REGULATORY RESPONSE

THE CONTAMINATION IS DISCOVERED — DURING SAMPLING, A NEIGHBOR'S COMPLAINT, A WATER TEST, OR AN INSPECTION. ENVIRONMENTAL AGENCIES ARE NOTIFIED AND AN INVESTIGATION IS OPENED.

PHASE 4

CLEANUP, LIABILITY, AND INSURANCE GAP

REMEDIATION IS REQUIRED. THIRD-PARTY CLAIMS ARRIVE. DEFENSE COSTS ACCUMULATE. STANDARD PROPERTY AND GL POLICIES MAY NOT ADEQUATELY ADDRESS THE ENVIRONMENTAL COMPONENT — AND THE GAP BECOMES VERY VISIBLE.

TANK LEAKS ARE THE MOST COMMON SLOW-DEVELOPING INDUSTRIAL ENVIRONMENTAL LOSS. THE LONGER THEY GO UNDETECTED, THE MORE EXPENSIVE THE REMEDIATION — AND THE HARDER THE COVERAGE DISCUSSION BECOMES.
PHASE 1

CHEMICAL RELEASE OCCURS

A PIPE FAILURE, EQUIPMENT MALFUNCTION, OR OPERATIONAL ERROR CAUSES A CHEMICAL RELEASE INSIDE OR OUTSIDE THE FACILITY. THE RELEASE MAY BE ACUTE OR MAY DEVELOP GRADUALLY.

PHASE 2

MATERIAL ENTERS DRAINAGE OR SOIL

THE RELEASED CHEMICAL ENTERS FLOOR DRAINS, SITE DRAINAGE SYSTEMS, OR DIRECTLY INTO SOIL — POTENTIALLY MOVING BEYOND THE FACILITY FOOTPRINT BEFORE BEING CONTAINED.

PHASE 3

NEIGHBORING PROPERTIES AFFECTED

THE CHEMICAL MIGRATION REACHES ADJACENT PROPERTIES OR PUBLIC AREAS. NEIGHBORING PROPERTY OWNERS FILE CLAIMS. REGULATORY AGENCIES OPEN INVESTIGATIONS. THE LOSS IS NOW MULTI-PARTY.

PHASE 4

CLEANUP, CLAIMS, AND DEFENSE

REMEDIATION COSTS, THIRD-PARTY PROPERTY CLAIMS, BODILY INJURY ALLEGATIONS, AND DEFENSE COSTS ACCUMULATE. THE ENVIRONMENTAL LIABILITY MAY SIGNIFICANTLY EXCEED WHAT STANDARD COVERAGE WAS BUILT TO HANDLE.

CHEMICAL RELEASES CAN ESCALATE RAPIDLY WHEN DRAINAGE SYSTEMS ACCELERATE THE SPREAD OF MATERIAL. THE LOSS SIZE IS OFTEN DRIVEN BY HOW FAR THE CONTAMINATION TRAVELS BEFORE BEING CONTAINED.
PHASE 1

PRIOR OPERATIONS LEFT CONDITIONS BEHIND

PREVIOUS OWNERS OR OPERATORS OF THE INDUSTRIAL SITE USED CHEMICALS, FUELS, OR PROCESSES THAT LEFT RESIDUAL CONTAMINATION. THE CURRENT OWNER MAY NOT FULLY KNOW THE HISTORY.

PHASE 2

CONDITIONS ARE DISCOVERED OR DISTURBED

DURING RENOVATION, EXPANSION, SAMPLING, A REAL ESTATE TRANSACTION, OR A REGULATORY INSPECTION, THE HISTORICAL CONTAMINATION IS DISCOVERED — OR DISTURBED BY NEW CONSTRUCTION.

PHASE 3

CURRENT OWNER FACES LIABILITY

DESPITE NOT CAUSING THE ORIGINAL CONTAMINATION, THE CURRENT OWNER OR OPERATOR MAY FACE CLEANUP OBLIGATIONS, THIRD-PARTY CLAIMS, AND REGULATORY REQUIREMENTS TIED TO THE HISTORICAL CONDITIONS.

PHASE 4

PROPERTY VALUE AND FINANCIAL IMPACT

THE SITE'S PROPERTY VALUE IS IMPAIRED. TRANSACTIONS ARE DELAYED OR FALL APART. LENDERS PULL BACK. THE FINANCIAL IMPACT OF THE HISTORICAL CONDITIONS — WHICH THE CURRENT OWNER DID NOT CREATE — FALLS ON THE CURRENT OWNER'S BALANCE SHEET.

HISTORICAL CONDITIONS ARE ONE OF THE MOST IMPORTANT REASONS INDUSTRIAL PROPERTY OWNERS SHOULD REVIEW ENVIRONMENTAL INSURANCE — EVEN WHEN THEIR CURRENT OPERATIONS APPEAR CLEAN AND WELL-MANAGED.
PHASE 1

CONTAMINATION ORIGINATES ON SITE

A RELEASE, LEAK, OR HISTORICAL CONDITION ON THE INDUSTRIAL FACILITY CREATES A CONTAMINATION SOURCE THAT BEGINS TO MIGRATE IN SOIL OR GROUNDWATER TOWARD THE PROPERTY BOUNDARY.

PHASE 2

CONTAMINATION CROSSES THE PROPERTY LINE

THE MIGRATING CONTAMINATION REACHES AN ADJACENT PROPERTY — A NEIGHBORING FACILITY, A RESIDENTIAL AREA, OR A PUBLIC AREA. THE FACILITY IS NOW CREATING AN ENVIRONMENTAL CONDITION ON SOMEONE ELSE'S LAND.

PHASE 3

THIRD-PARTY CLAIMS FILED

NEIGHBORING PROPERTY OWNERS FILE CLAIMS FOR PROPERTY DAMAGE, DIMINISHED PROPERTY VALUE, AND CLEANUP COSTS. BODILY INJURY CLAIMS MAY FOLLOW IF OCCUPANTS WERE EXPOSED.

PHASE 4

MULTI-PARTY ENVIRONMENTAL LOSS

THE INDUSTRIAL FACILITY FACES CLEANUP COSTS ON ITS OWN SITE PLUS REMEDIATION OBLIGATIONS AND THIRD-PARTY LIABILITY FOR THE OFF-SITE MIGRATION — A MULTI-LAYERED LOSS THAT STANDARD PROGRAMS OFTEN DO NOT ADEQUATELY ADDRESS.

OFF-SITE MIGRATION CLAIMS ARE OFTEN THE LARGEST AND MOST EXPENSIVE INDUSTRIAL ENVIRONMENTAL LOSSES — BECAUSE THEY COMBINE ON-SITE REMEDIATION COSTS WITH THIRD-PARTY LIABILITY FOR CONDITIONS ON OTHER PEOPLE'S PROPERTY.
PHASE 1

INDUSTRIAL PROPERTY TRANSACTION BEGINS

AN INDUSTRIAL PROPERTY IS LISTED FOR SALE, A MERGER TRIGGERS PROPERTY REVIEW, OR A REFINANCING REQUIRES AN ENVIRONMENTAL ASSESSMENT. THE TRANSACTION PUTS ENVIRONMENTAL CONDITIONS UNDER FORMAL SCRUTINY.

PHASE 2

DUE DILIGENCE REVEALS ENVIRONMENTAL ISSUES

PHASE I OR PHASE II ENVIRONMENTAL SITE ASSESSMENT UNCOVERS RECOGNIZED ENVIRONMENTAL CONDITIONS — CONTAMINATED SOIL, GROUNDWATER CONCERNS, UST HISTORY, OR UNRESOLVED REGULATORY FINDINGS.

PHASE 3

DEAL ECONOMICS CHANGE

THE BUYER DEMANDS A PRICE REDUCTION, SELLER INDEMNITIES, OR ESCROW ARRANGEMENTS. THE LENDER MAY ADD CONDITIONS OR PULL BACK. DEAL TIMELINES EXTEND. TRANSACTION COSTS RISE.

PHASE 4

ENVIRONMENTAL INSURANCE BECOMES THE SOLUTION

ENVIRONMENTAL INSURANCE IS INTRODUCED TO BRIDGE THE GAP — PROVIDING RISK TRANSFER THAT ALLOWS THE DEAL TO PROCEED ON TERMS BOTH PARTIES CAN ACCEPT. WITHOUT IT, THE DEAL MAY FAIL ENTIRELY.

ENVIRONMENTAL UNCERTAINTY IS ONE OF THE MOST COMMON REASONS INDUSTRIAL PROPERTY TRANSACTIONS STALL OR FAIL. ENVIRONMENTAL INSURANCE IS OFTEN THE MECHANISM THAT KEEPS THE DEAL MOVING.
COMMON EXPOSURES

ENVIRONMENTAL RISKS FOR MANUFACTURING & INDUSTRIAL FACILITIES

THESE ARE THE SPECIFIC EXPOSURE TYPES THAT DEFINE THE ENVIRONMENTAL LIABILITY PROFILE FOR MANUFACTURING AND INDUSTRIAL OPERATIONS — ACROSS CURRENT OPERATIONS, HISTORICAL CONDITIONS, AND TRANSACTIONAL RISK.

CRITICAL
SOIL CONTAMINATION
CRITICAL
GROUNDWATER IMPACT
CRITICAL
CHEMICAL RELEASE
HIGH
TANK LEAKS
HIGH
FUEL OR FLUID RELEASE
HIGH
WASTE HANDLING ISSUES
HIGH
RUNOFF OR MIGRATION TO NEIGHBORING PROPERTY
HIGH
PROPERTY VALUE IMPAIRMENT
BASE
THIRD-PARTY PROPERTY DAMAGE
BASE
THIRD-PARTY BODILY INJURY
BASE
REGULATORY RESPONSE
BASE
CLEANUP COSTS & DEFENSE COSTS
FAQS

COMMON QUESTIONS — ENVIRONMENTAL INSURANCE FOR MANUFACTURING & INDUSTRIAL FACILITIES

WHY DO MANUFACTURING FACILITIES NEED ENVIRONMENTAL INSURANCE?
BECAUSE THE SITE OPERATIONS, STORAGE EXPOSURE, AND POSSIBLE CONTAMINATION HISTORY CAN CREATE SIGNIFICANT ENVIRONMENTAL LIABILITY THAT STANDARD PROPERTY AND GENERAL LIABILITY PROGRAMS WERE NOT DESIGNED TO HANDLE. INDUSTRIAL ENVIRONMENTAL LOSSES FOLLOW THEIR OWN LOGIC — INVOLVING CLEANUP COSTS, REGULATORY RESPONSE, THIRD-PARTY CLAIMS, AND PROPERTY VALUE IMPACT ALL AT ONCE.
IS THIS MAINLY A SITE POLLUTION DISCUSSION?
IN MANY CASES, YES. THE PROPERTY, FACILITY, AND OPERATIONS ARE OFTEN THE CENTER OF THE EXPOSURE. THE PRIMARY COVERAGE DISCUSSION FOR MOST INDUSTRIAL FACILITIES IS SITE POLLUTION LIABILITY (PLL) — WHICH IS DESIGNED AROUND FIXED-SITE ENVIRONMENTAL EXPOSURE TIED TO THE PROPERTY AND ITS OPERATIONS. BUT TRANSACTION RISK, PROFESSIONAL SERVICES, AND MULTI-SITE CONSIDERATIONS MAY ALSO COME INTO PLAY.
CAN HISTORICAL CONDITIONS MATTER EVEN IF OPERATIONS HAVE CHANGED?
YES. A FACILITY'S HISTORY CAN STILL AFFECT THE CURRENT OWNER OR OPERATOR — EVEN IF OPERATIONS HAVE COMPLETELY CHANGED. PRIOR INDUSTRIAL USE, REMOVED OR ABANDONED TANKS, HISTORICAL CHEMICAL HANDLING, AND PAST CONTAMINATION EVENTS CAN CREATE CURRENT LIABILITY THAT DID NOT ORIGINATE WITH THE CURRENT OWNER. THIS IS ONE OF THE MOST IMPORTANT REASONS INDUSTRIAL PROPERTY OWNERS SHOULD REVIEW ENVIRONMENTAL COVERAGE BEFORE A CLAIM OR TRANSACTION SURFACES THE ISSUE.
DOES STANDARD PROPERTY INSURANCE HANDLE THIS WELL?
NOT NECESSARILY. PROPERTY INSURANCE IS DESIGNED AROUND PHYSICAL DAMAGE TO STRUCTURES AND EQUIPMENT — NOT GROUNDWATER REMEDIATION, THIRD-PARTY ENVIRONMENTAL CLAIMS, REGULATORY RESPONSE COSTS, OR PROPERTY VALUE IMPAIRMENT FROM CONTAMINATION. ENVIRONMENTAL LIABILITY OFTEN REQUIRES A DIFFERENT REVIEW AND A DEDICATED COVERAGE STRUCTURE.
WHEN SHOULD AN INDUSTRIAL FACILITY REVIEW THIS COVERAGE?
BEFORE A CLAIM, BEFORE A TRANSACTION, BEFORE A REGULATORY ISSUE, AND BEFORE ASSUMING THE CURRENT PROGRAM IS ENOUGH. INDUSTRIAL FACILITIES THAT HAVE EXPERIENCED A SIGNIFICANT ENVIRONMENTAL LOSS — OR THAT HAVE BEEN THROUGH AN INDUSTRIAL PROPERTY TRANSACTION COMPLICATED BY ENVIRONMENTAL UNCERTAINTY — KNOW EXACTLY WHY THIS REVIEW SHOULD HAPPEN EARLIER RATHER THAN LATER.
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