Air Date: 6-28-2013| Episode: 290
This week we are going to talk about environmental insurance issues for IAQ and disaster restoration contractors and consultants…
This week we are going to talk about environmental insurance issues for IAQ and disaster restoration contractors and consultants. Insurance companies gamble on the future and can be a good indicator of where an industry is and where it is going. What are the current trends in environmental insurance and what does the future look like? Brian Mcfarland is Vice-President of Sales for Legends Environmental Insurance Services. Prior to joining Legends he served as Director of Business Development/Marketing and IAQ Department Director for Environmental Support Solutions. His current primary responsibility at Legends is management of insurance programs for environmental safety & health associations. Brian works with every size disaster restoration and IAQ company and knows the pitfalls of this business. He is our go-to guy for environmental insurance questions and we welcome him back to IAQ Radio to discuss this important topic.
Risky Business, Environmental Insurance
Brian McFarland was today’s guest on IAQradio. Brian is VP of sales for Legends Environmental Insurance services and has over 10 years experience in insuring high risk businesses.
Nuggets mined from today’s broadcast:
· Environmental contractors, IEPs, HVACR cleaners, disaster restorers, asbestos and lead abatement firms, soil remediation and testing firms all have special insurance needs and should consider obtaining environmental insurance.
· Environmental insurance is not usually offered by admitted carriers because the states in which they do business more closely regulate their insurance forms and rates. High risk insurance such as environmental insurance is offered by surplus lines carriers who have more flexibility to adjust policy forms or otherwise create coverage.
· Re-insurers sell insurance to insurance companies for catastrophic losses. Severe weather events can cause re-insurers to lose money and the only way they can recover it is to raise rates, which get passed along to policyholders.
· Good news is that environmental insurance coverage has shifted from claims made to occurrence. Bad news is that the market is hardening and rates are going up 6%-8%. When markets harden access to coverage becomes more difficult and policies may offer more restrictive coverage.
· Trend of fewer sick building syndrome claims.
· Prices for mold coverage were 300% higher in 2001-2005. In 2001-2005 only 4 or 5 carriers would write mold coverage, there were 27 in 2011.
· It’s not if but when you will be sued.
· Use your contracts and paperwork as a protective mechanism.
· Total pollution exclusion excludes all neutralizing, detoxifying or cleaning up. A pollutant is any solid, liquid or gas.
· Under an occurrence insurance policy, whoever insured you at that time will always be responsible for a covered claim from that time when they insured you..
· Under a claims made insurance policy, the carrier is only responsible while they insure you back to the retroactive date on the policy.
· “errors & omissions (E&O) in the US, is a form of liability insurance that helps protect professional advice- and service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit. The coverage focuses on alleged failure to perform on the part of, financial loss caused by, and error or omission in the service or product sold by the policyholder. These are potential causes for legal action that would not be covered by a more general liability insurance policy which addresses more direct forms of harm. Professional liability coverage sometimes also provides for the defense costs, including when legal action turns out to be groundless.” [Source Wikipedia]
· The function of the retroactive date is to eliminate all coverage under a claims-made Comprehensive General Liability policy for any bodily injury or property damage that occurred before the retroactive date. The retroactive date on an insurance policy is very important, nose and tail coverage are available to mitigate the risk of the retroactive policy date.
· In the case of a building occupant who claims to be sickened or injured by products used as part of the cleaning or remediation process, insurance coverage may be afforded by general liability, contractor’s pollution or manufacturers products liability. In these cases the plaintiff sues everyone who might be remotely responsible. The average defense cost is 50K. These cases can go on for years and rack up large defense costs.
· Better insurance companies value 3rd party certification.
Today’s Music: “High Risk Insurance” by the ramones
I have been purchasing business insurance for over 40 years and I still don’t have a comfortable grasp on it. I can personally attest to the importance and value of an insurance agent going to bat for me during insurance times of need.
Z-Man signing off