Orlando, Fla.—April is when we celebrate Earth month, and the time of the year when everyone stops to take a look at the environmental impact caused by our activities and surroundings. Across the country, businesses are choosing to go green. In addition to helping the planet, environmentally friendly practices and facilities can enhance the reputation of a business and lower its energy and water costs. Businesses are also encouraged to go green by government tax credits and other incentives.

A business that operates in a traditional way may also need insurance related to environmental issues. For example:

The environmental insurance coverage is designed to respond to claims stemming from the release of pollutants into the environment which is excluded from a Standard Commercial Liability policy, thus creating a gap.

Most Standard Commercial General Liability policies define a “pollution event” in part as arising out of the discharge, dispersal, release or escape of:

• Smoke
• Vapors
• Soot
• Fumes
• Acids
• Alkalis
• Toxic chemicals
• Liquids or gases
• Waste materials
• Other irritants & contaminants

There are several environmental regulations that companies must comply with. Not complying with these regulations could result in fines, penalties, and legal actions by environmental regulators or third parties. Some of the most notable ones that include environmental liability provisions are:

Clean Air Act

The Clean Air Act is the comprehensive federal law that regulates air emissions from stationary and mobile sources. Among other things, this law authorizes EPA to establish National Ambient Air Quality Standards to protect public health and public welfare and to regulate emissions of hazardous air pollutants.

Clean Water Act

The Clean Water Act establishes the basic structure for regulating discharges of pollutants into the waters of the United States and regulating quality standards for surface waters.

Resource Conservation and Recovery Act

The Resource Conservation and Recovery Act gives EPA the authority to control hazardous waste from the “cradle-to-grave.” This includes the generation, transportation, treatment, storage, and disposal of hazardous waste. RCRA also set forth a framework for the management of non-hazardous solid wastes.

Comprehensive Environmental Response, Compensation and Liability Act

Otherwise known as CERCLA or Superfund — provides a Federal “Superfund” to clean up uncontrolled or abandoned hazardous-waste sites as well as accidents, spills, and other emergency releases of pollutants and contaminants into the environment.

On the other hand, businesses preparing to leave a smaller carbon footprint and operate with a higher energy efficiency, will benefit from improved safety and resilience to withstand windstorms and other weather-related events. Your business may also be able to save on insurance as a result of other green initiatives. As an example, discounts may be available for your commercial vehicle policy similar to those offered for personal auto insurance for hybrid and electric cars.

Traditional commercial property insurance covers replacement or repair of damaged property, using similar materials to the original construction, or basing repayment on the value of the original equipment or building. But what if you want to go green when repairing or replacing insured property or equipment? 

Most standard policies will not account for this scenario, unless the policy has wording that specifically recognizes and covers the increased cost of green materials. However, several insurers offer green endorsements—add-on components—to commercial property policies. 

These green endorsements include coverage for:

• Green Materials and Equipment—A green endorsement on your commercial property insurance will cover the higher cost of environmentally certified materials and equipment—even if your original property and equipment were not green certified. Some policies will also specifically enable you to elevate your building to green certification when you rebuild.

• Green Construction and Related Costs—Covers costs for green design and engineering, recycling, certification fees and other costs.

While green endorsements on a commercial policy may cost more, having a green building in conjunction with improved building codes (which enforces impact-resistant windows, hurricane shutters, reinforced doors and roof straps) could ultimately protect your property from being badly damaged or destroyed in a future weather-related disaster.

At Garzor Insurance our experienced professionals are dedicated to providing commercial insurance coverage for businesses in Florida as well as Georgia, Texas, and now many other states across the U.S.A. If you have questions about business insurance, or any other commercial insurance aspects, please do not hesitate to visit us online at Garzor Insurance, or you may want to call us directly at (321) 206-8035. 

Yaralyn Diaz, CSR

Commercial Lines CSR