Products Pollution Insurance Claim Scenarios

A small distributor of silicone sealer was named in a suit alleging that fumes from the sealer had entered the ventilation system of a major department store forcing the evacuation and two-day closing of the establishment. Damages of $210,000 were being sought. The distributor, relying on vendor’s coverage from the manufacturer, did not own a products pollution liability policy. After putting the manufacturer on notice, the distributor was dismayed to find that the manufacturer’s insurer denied coverage based on an absolute pollution exclusion that excluded any loss arising out of the actual, alleged or threatened discharge of any solid, liquid, gaseous, or thermal irritant or contaminant including chemicals. Based on the inadequacy of the manufacturer’s insurance, the vendor’s coverage was worthless and the distributor was left with an uninsured loss of $210,000.

An industrial facility has their air pollution control equipment updated and a 3rd party contractor installs new scrubbers. Over the next week, neighbors of the facility complain of dizziness, nausea and several have to be hospitalized due to fumes found to be coming from the facility’s exhaust stacks. It is determined the scrubber was installed properly—the problem was the scrubber itself had been manufactured improperly. The scrubber manufacturer was sued and forced to pay over $500,000 in damages.

A reconditioner of industrial drums was sued by a prior customer for contamination of the product the customer stored in the drums. The end user was putting hydraulic fluid in the reconditioned drums, and then delivering it to commercial job sites for on-site upkeep of heavy equipment. Rust on the inside of the drums contaminated he fluid, causing significant damage to the machinery it was used in. The GL carrier declined the insurance claim citing the absolute pollution exclusion on the policy.

These claims examples have been provided to us by our insurance companies over the years. These represent actual environmental claims they have seen. While the coverages we offer are designed to address these general issues, we make no guarantee or warranty that any individual policy we offer will respond to all issues as described herein. Please refer to the actual policy wording in each offered form to determine coverage applicability and acceptability.