Overview
When a cement truck turns over and pollutes a stream, how is that exposure addressed on your insurance policy? If a freight hauler is unloading drums of soap and one of those drums turns over and spills into a storm drain, how are you protected? At Paperless Insurance Services we offer transportation pollution liability (“TPL”) coverage to address these exposures.
Transportation pollution liability provides protection for products or materials transported, shipped, or delivered by the insured or by a carrier on the insured’s behalf. Typically, TPL offered to risks with transportation exposure, but some carriers will also specifically include loading and unloading. While unendorsed contractor’s pollution liability (“CPL”) policies may include coverage for vehicle use at a job site, they usually offer little or no coverage for transportation exposures away from a job site. TPL would be available to address this exposure. Additionally, TPL is available for site-specific risks with transportation exposures including manufacturers, freight forwards, and distribution centers. This enhancement can be endorsed onto site pollution to address their exposure.
While capabilities vary from carrier to carrier, most insurance companies offer coverage on a blanket or scheduled basis with occurrence and claims-made triggers available. Typically, minimum premiums start around $2,500.
Claim examples
Example 1
The insured, a waterproofing contractor, was traveling to a job site in a tanker containing liquid waterproofing material to be used at the job. The vehicle became involved in a collision, and 100 gallons of the product were released onto the road. Both the insured’s vehicle and a third-party vehicle sustained damage. Additionally, the spill was immediately reported to the Department of Environmental Protection (DEP) and was remediated.
Example 2
In another situation, the insured was in the business of collecting and disposing of used motor oil from auto repair shops and other vendors. After several pickups and in the course of traveling on a thruway, the truck hit a slick area on the road and overturned, totaling the vehicle and spilling 500 gallons of used motor oil onto the road and into a stream that abutted a residential area. The spill was reported to the DEP, an emergency response team cleaned the road, and the insured was responsible for the investigation of soil and water impact, significant remediation, and future monitoring costs. Since the location was a remote area, far from a city, remediation efforts were significant ($700,000).
The insureds in both of these claims carried business auto (“auto”) coverage, commercial general liability (“CGL”) coverage, and contractor’s pollution liability (“CPL”) coverage with a transportation pollution liability (“TPL”) coverage endorsement. The auto carrier covered losses to the first- and third-party vehicles and bodily injury. However, the auto policy’s “pollution” exclusion precluded coverage of loss arising out of the escape of pollution being hauled by a vehicle. The CGL coverage was precluded by the “auto” and “pollution” exclusions. As to the CPL coverage, although this coverage protects the insured against certain pollution losses, it typically does not cover damages arising from a release of pollutants from a vehicle beyond the boundaries of the job site. In the above situations, the CPL coverage “vehicles” exclusion precluded coverage for the property damage arising from the use of the vehicle outside the boundaries of the work site, and absent the TPL coverage endorsement, the “transported materials” exclusion would have precluded property damage arising from products transported to a location beyond the boundaries of a job site. Fortunately for these insureds, however, they were covered by the TPL coverage endorsement, which specifically gave back coverage in these instances for property damage arising from a pollutant in the course of being transported by a covered vehicle beyond the boundaries of the job site.
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Disclaimer: The facts and circumstances giving rise to potential coverage and the determination of whether coverage existed in these instances above are intended for instructional purposes only. Be sure to consult actual CPL coverages and exclusions and associated TPL coverage endorsements to determine whether coverage would exist in particular circumstances.
The original article by Cody Barden was edited and optimized for Paperless Insurance blog. This article was originally published by AmWINS Group, Inc.
Legal Disclaimer: Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
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