Transcript Document

WELCOME
Chris Bunbury, eS
Environmental Risk Managers, Inc.
Email: [email protected]
Phone: (231) 256-2122
Fax: (231) 256-2123
PO Box 1127
Leland, MI 49654
www.EnvironmentalRiskManagers.com
ENVIRONMENTAL RISK MANAGEMENT
AND
INSURANCE STRATEGIES
FOR AGRICULTURAL OPERATIONS
EVERY AGRICULTURAL
BUSINESS IS IMPACTED BY
ENVIRONMENTAL
EXPOSURES
What is a pollutant?

A material, substance, product…. introduced
to an environment for other than its
intended use / purpose.

Fresh water

Cheese
Environmental Liability Exposures
If an agricultural operation waits until
an environmental problem occurs and
any governmental body
gets involved, the cost to address the
environmental problem will increase
on an average of 35% to 50%
Environmental Liability Exposures
Impacting Agricultural Operations
Potential Environmental Exposures Impacting
Agricultural Operations
•
•
Storage, use and disposal of fertilizers, pesticides,
herbicides and animal waste
Releases from above ground or underground storage
tanks
•
Storm water runoff
•
Spills from loading and unloading of farm equipment
and supplies
•
Air emissions from chemical applications and animal
waste
Potential Environmental Exposures Impacting
Agricultural Operations
•
Faulty refrigeration units
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Natural resource damage
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Vapor intrusion
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Waste lagoons
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Vandalism....
Environmental Liability Insurance
Coverage Overview
For Agricultural Operations
98% of US businesses are
“small business”
that can’t afford to self
insure their environmental
exposures
3 Main Benefits of Environmental
Liability Insurance
Defense costs
• Claim management
• Third party liability (property damage, bodily injury,
and business interruption)
•
Face value of an environmental
insurance policy costs the
insured tenths of a cent on the
dollar, or the insured can wait
until a loss occurs and pay 100
cents on the dollar out of their
own pocket
Environmental Impairment
Liability (EIL)
Also referred to as Pollution Legal Liability (PLL)
• Site Specific Coverage for new and/or pre-existing
unknown environmental conditions
• First party on site cleanup
• On site and off site third party bodily injury, property
damage and business interruption
• First and/or third party auto pollution liability
• Off site disposal coverage
• Under ground storage tanks
•
Property Transfer Coverage
•
Protects the buyer and/or seller should an
environmental condition be found that was not
caused by the new purchaser of the property
•
Supports the value of the property
•
Fills in gaps with environmental due diligence
•
Allows you to negotiate a more favorable loan
package
Transportation Pollution Liability (TPL)
•
Not the MCS 90 endorsement
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Broadened auto pollution liability form CA 9948
•
Covers during the loading / unloading and
transportation of the cargo
•
800,000 tons per day of hazardous materials are
shipped in the United States
•
How do you purchase your raw materials FOB point of
shipment / delivery
Underground and Above Ground
Storage Tanks (UST or AST)
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Protects for releases from underground tank systems
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Does not replace tanks or equipment
Natural resource damages covered?
•
Who are you doing business with?
Vendors can create environmental liabilities for you. Do
they have the financial assurance to protect you?
Contractor Pollution Liability (CPL)
•
Protects the insured while operating away from
any premises they own, rent, lease or occupy, should
they cause or exacerbate an environmental liability.
•
Chemical applications
•
Construction Services
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Equipment maintenance
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Waste management
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Harvesting...
Professional Liability (E&O)
E&O coverage for environmental
engineers/consultants conducting:
•
•
Environmental Site assessments
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Testing waste water and soil
•
air emissions...
During an unusually heavy rainstorm,
the wall of a farms on site lagoon used
to treat pig waste collapsed. More
than 150,000 gallons of fecal waste
flowed offsite, onto neighboring
properties and into a river. Waste
cleanup costs exceeded $350,000,
while third party damage claims
exceeded $75,000.
A property owner had his drinking water well
tested prior to selling his land. Testing revealed
that the well contained an alarmingly high
concentration of total petroleum hydrocarbons.
The source of the contamination were several
dozen drums of waste oil and maintenance fluids
buried on a neighboring farm. Though the drums
were buried by the previous farm owner, the
current owner was nevertheless responsible for
disposal of the drums, soil, groundwater cleanup,
bodily injury, and property damage claims which
exceeded $1,000,000 and caused the farmers
bankruptcy.
A slaughterhouse disposed of all of its waste
down a floor drain. Over time the floor
drain eroded and cracked allowing the
waste to flow into a nearby stream. A fish
kill occurred as a result of high biological
oxygen demand in the stream. Under the
Clean Water Act (CWA), a local
environmental group filed a suit for loss of
the stream. The slaughterhouse spent
$750,000 remediating the problem.
A dairy farmer was using treated waste
water as a fertilizer in a land application
process. Improper testing of the waste
water by a third party lab did not detect
heavy metals and excessive e-coli. After
several months of application testing
revealed excessive amounts of heavy metals
and e-coli in the soil. The farmer had to
pay remediation costs in excess of
$265,000.
Over a period of several years storm water
from a chicken processing plant entered a
nearby stream and lake. Due to excessive
algae and bacteria in the lake, nearby
residents and businesses filed claims for
property damage, loss of enjoyment and
perceived bodily injury. The chicken
processing plant was found liable and had to
spend $2,000,000 resolving the
environmental damage and controlling their
storm water.
Authorities evacuated a small farming
town after a noxious cloud drifted in
from a 30,000 gallon tank leaking
anhydrous ammonia which is used as
fertilizer. Police said the open valve
on the tank made them suspicious
somebody might have tried to steal
some fertilizer and left the valve open.
Anhydrous Ammonia can also be used
to make the drug methamphetamine.
Phase I and Phase II environmental
assessments involve limited sampling and
cannot guarantee that a property is clean.
For example, a real estate limited
partnership acquired property previously
used for farming on which they planned to
build a mall. When excavation for the mall
began 100 drums of buried pesticides and
herbicides were unearthed. The chemicals
contaminated the soil and remediation and
disposal costs exceeded $750,000.
Conclusion
•
Environmental exposures impact every agricultural
operation
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Sustainability begins with risk management
•
Most agricultural operations can’t afford to self
insure their potential environmental liabilities
•
Who are agricultural operations doing business with
that can cause them to experience an environmental
loss
Thank you for your time.
To drive your environmental insurance sales contact:
Parker Bunbury @ [email protected]
Phone: 231-218-1118
Chris Bunbury @ [email protected]
Phone: 231-256-2122
www.EnvironmentalRiskManagers.com