Pollution/environmental coverage
Why your association's liability policy almost never pays for a spill or contamination cleanup.
Your association's general liability policy provides almost no coverage for pollution cleanup. The policy defines "pollutant" broadly enough to include almost any irritant or contaminant, solid, liquid, gas, or heat, which excludes far more than most boards expect. If your property has any real pollution exposure, ask your broker about a separate pollution or environmental liability policy.
Why your GL policy won't help
Boards often assume that general liability coverage handles any claim arising on the property, including contamination. It does not. The standard commercial general liability form carries a pollution exclusion, and it is written to leave cleanup and remediation costs almost entirely uncovered.
"The basic 2001 ISO CGL policy provides very little pollution coverage, particularly in the area of cleanup or remediation." "There is no coverage for the clean up of pollutants, implied or express exceptions not withstanding."
Source: IRMI Glossary of Insurance and Risk Management Terms, "The CGL Pollution Exclusion", International Risk Management Institute
This is one of several risks a standard GL policy carves out. It also does not pay for damage to the association's own buildings, so pollution sits alongside a short list of exposures that need their own coverage line.
What counts as a "pollutant"
The word does a lot of work in the exclusion. It is not limited to obvious hazards like a fuel spill.
"'Pollutant' is a very expansive term that includes just about any type of irritant or contaminant, whether it is a solid, liquid, gas, or by heat (thermal)."
Source: IRMI Glossary of Insurance and Risk Management Terms, "The CGL Pollution Exclusion", International Risk Management Institute
Whether a specific substance on your property, such as a stored chemical or a maintenance byproduct, meets your insurer's definition of a pollutant is not something this course can answer. Read the definition in your own policy, or ask your broker directly.
When to get separate coverage
If the property has any meaningful pollution exposure, the fix is not to hope the GL policy stretches to cover it. Industry guidance points the other way.
"Risk managers, brokers, and agents would do well to either extensively amend the CGL or obtain separate pollution coverage for any of their policyholders who have more than minimal or incidental pollution exposures."
Source: IRMI Glossary of Insurance and Risk Management Terms, "The CGL Pollution Exclusion", International Risk Management Institute
In practice that means a conversation with your broker: either amend the general liability policy to add pollution language, or buy a standalone pollution or environmental liability policy. Which one makes sense depends on what is actually on your property and what your insurer will offer.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
A pipe bursts and floods the parking garage with oil from a leaking storage tank. The board looks to the general liability policy to pay for cleanup. What should the board expect?
The board assumes only chemical spills count as pollution under the policy's exclusion. Why is this assumption risky?
The association owns an aging pool and boiler room with real pollution exposure. What should the board do, per industry guidance?
Sources
- IRMI Glossary of Insurance and Risk Management Terms, "The CGL Pollution Exclusion", International Risk Management Institute
- "HOA General Liability: What Premises and Operations Really Covers", StarNet Insurance Group
Insurance
Not sure what your general liability policy actually covers on its own? Start with General liability.
What counts as a pollutant, whether your general liability policy has been amended to add any pollution coverage, and whether a standalone pollution policy is available or affordable for your property all vary by insurer and by what is actually on site. Read your policy's own definition of "pollutant" before assuming either way.