Your service manager calls you and explains there has been a pollution incident with your waste oil. Do you have insurance coverage?
If you live in the United States, be afraid, because anyone with your EPA generator number who has picked up pollutants from your dealership has created a liability for you. Some greedy attorney will sue you for every dime you have earned. Our government will fine you, plus interest. The courts will imprison you, pending judgment, and your spouse will leave you for a rich plastic surgeon. I’m told fear and sex are the two best ways to get a dealer’s attention – the rest of this article has neither. But if I still have your attention, the following is worth reading!
Every dealership has pollution liability exposures, but many dealers don’t have insurance coverage for these complex and constantly emerging hazards. Many companies that have significant pollution exposures are required to buy pollution coverage (ie: those with underground tanks); however, for most dealerships, the decision to purchase insurance is voluntary.
This coverage is often overlooked by insurance agents because they don’t understand dealership pollution exposures or they don’t have access to markets that can provide cost effective coverage. Most garage liability carriers have standard pollution exclusions, so a separate policy is almost always required. There are many different types of coverages and policies depending on the complexity of your pollution exposures and hazards.
Every dealership has pollution exposures.
For example: solvents, caustics, cleaning agents, collision repair and painting operation, and petroleum products all can create pollution exposures. Results of pollution incidents include:
- Damage to third party
- Clean up costs of contaminated property
- Off-site waste disposal clean up expense
- Fines and penalties for violation and adverse public reactions
The Resource Conservation and Recovery Act provides “cradle to grave” regulation of hazardous waste. It imposes strict waste management requirements upon generators and transporters of hazardous waste, and upon waste treatment storage and disposal facilities. This basically means that you own the liability for the lifetime of the pollutant. There is also strict joint and several liability with pollution incidents which means, regardless of who was negligent, you can be brought into the suit to defend and remediate the pollution incident.
At a minimum, every dealership needs three basic coverages.
First, your dealership property and damage to third party that originates at your property for bodily injury, property damage and clean-up costs. Second is transportation coverage from non-owned autos that pick up your pollutants and transport them to non-owned disposal sites for bodily injury, property damage and clean up cost. Third is non-owned disposal sites which offers coverage for properly permitted sites for bodily injury, property-damage and clean up resulting from pollution event on, under or migrating beyond the boundaries of disposal sites. In some instances, if you have underground tanks, you need specialized coverage.
Take the time at your next renewal to ask your agent to review the pollution coverages to make sure your exposures are covered and there are no surprises. Depending on the size of your dealership, pollution policy premiums start around two thousand dollars for one million dollars of coverage.