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Most business owners and executives tend to think of pollution insurance as something that is only necessary for corporations whose operations can lead to a catastrophic environmental disaster over a single mistake. Of course, there are some businesses in which these hazards are clear from the start. But many companies fail to realize how their own operations can lead to a large or small scale environmental disaster. Some have realized too late that even a contamination that spreads only a few square miles can lead to substantial losses.

Fortunately, financial backup is available in the form of industrial special risks insurance for larger companies, or specific pollution insurance plans for organizations of all sizes. These plans can help protect companies from the costs associated with environmental disasters of any scale.

Why Pollution Insurance is Necessary


One of the most important reasons to obtain pollution insurance is that conventional business insurance plans do not typically cover problems that result from a large or even small scale environmental problem. This means that something as small as a simple gas leak can result a business having to pay expensive fines to the relevant regulatory agencies. Only specific insurance policies will cover such an event, and not all companies offer them. Although some plans are offered by well-known providers, the most competitive rates are typically offered by lesser-known organizations. For this reason, it’s important to carefully research each company’s track record while searching for the best coverage rate.

Pollution Can Destroy a Business

Environmental regulations are changing constantly due to the growing concern over the impact of pollutants. Maintaining compliance with these regulations can be difficult for every business, from a family owned shop to a large corporation. Aulson, a small industrial cleaning company, realized just how detrimental these regulations can be when it was forced to pay over $30,000 in fines for its improper storage practices. Fines this high can easily force a small business into bankruptcy, especially if the incident also has a negative impact on the company’s reputation within the community and hence leads to a loss of customers. Even small businesses that operate from an office face the potential of water main breaks, Freon leaks, and more.

Large corporations, especially those that operate globally, can face even greater environmental issues. Foreign laws are not always clear and, like U.S. laws, can change frequently. The Coca-Cola Company has faced this problem for over five years after a plant in southern India was blamed for causing a drought after using an excessive amount of groundwater. Fines, lawsuits, civil discourse, and threats of a forced closing are just a few of the issues that have plagued the company during the course of this claim. Breaking foreign and international laws can lead to high fees charged by any or all of :
  • The country in which the violation took place
  • International regulatory bodies
  • The corporation’s home country
Additional interruptions of a company’s operations are also likely to follow such a claim of pollution, leading to even greater financial losses. Pollution insurance cover could have saved PT Lapindo Brantas from the potential bankruptcy it faces after a failed drilling project resulted in a destructive mud volcano. The proper coverage could have prevented the significant losses incurred by the company since the incident happened.

Protect Your Business from Pollution Claims

A pollution insurance plan can help protect businesses from the losses related to a claim of pollution or environmental damage. These plans can cover expenses resulting from a variety of environmental disasters. Cleanup efforts, lost wages, fines, and even the money lost after being forced to halt operations can all be covered by the right plan. For bigger companies, industrial special risks cover will take care of the costs in almost any eventuality, For smaller comapnies, a specific pollution insurance policy may be a better fit. These plans can be tailored to cover a specific geological location or a broad range of international operations. Insurance providers can also tailor policies to meet a broad list of potential disasters according to each company’s operations.

About Denny Jones

Hi there! I am Denny, a personal finance blogger and I love to share tips related to managing finance for a better living. Follow my blog for lots of fresh and exciting tactics to control your finances.
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