...in the course of extracting pollutants is covered.
To be paid, expenses must be reported to the insurer in writing within 180 days of the date of loss. As with the debris removal expenses, they need not be incurred within this time; contractors’ estimates of expenses to be incurred will suffice, but if these are not available or further delay is unavoidable, the insurer should be asked for an extension.
Typical losses that could come within this coverage might include leakage of oil or chemicals from a storage tank or a broken supply line into the ground or lake, lagoon or stream on the insured’s premises.
Note that in this discussion, we are considering only the insured’s own property loss exposure. “Third party” claims—injury to others or damage to their property—as well as workers compensation claims from pollution are also major exposures for any insured involved with hazardous or toxic materials, but are outside the scope of this article. However, in the event of ground or water pollution from an outside source, the possibility of third-party recovery against the party causing the pollution, or subrogation by the insurer, having paid for the pollution damage, should not be overlooked.
Anticipating losses that may result from debris removal or pollution damage, and understanding the coverages that can protect against them are essential considerations in structuring an adequate property insurance program. They can make the difference between a devastating disappointment and a complete recovery after a loss occurs.
Mr. Malecki is a principal of Malecki Deimling Nielander & Associates, LLC, an insurance and risk management firm. He began his career over 50 years ago and has held the titles of insurance underwriter, broker, insurance company claims consultant, archivist, historian and teacher.
The late Mr. Dudey was associated with the insurance industry for more than 50 years in a variety of roles. He was associate editor for over two decades of The Fire, Casualty and Surety (FC&S) Bulletins , published by The National Underwriter Company. Earlier in his career, he had worked as a risk analyst, an underwriter and a broker.
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