March 11, 2016 by Canadian Underwriter
Farming operations handling fertilizers and pesticides could have “significant gaps” in insurance coverage due to pollution risk, Chubb Ltd. warned in a paper released Friday in the United States.
“Typical agricultural policies provide only limited coverage in specific circumstances for pollution incidents,” Chubb said in a report, titled Agricultural Businesses Face Unrecognized Environmental Risks.
“That can leave agricultural co-ops and companies that work with pesticides, chemicals, fertilizers and other hazardous materials with potentially significant gaps in coverage.”
Chubb noted that some commercial general liability policies “may provide some limited coverage for sudden and accidental incidents,” but they will not necessarily “respond to gradual releases that lead to pollution conditions or first party remediation cleanup costs.”
Related: Pollution Liability
The paper was written by Craig Richardson, Atlanta-based senior vice president for environmental risk, and Philip Twietmeyer, Chubb’s senior vice president for agriculture based in Wilkes Barre, Penn. Richardson joined Zurich-based ACE Ltd. in 2008. ACE completed its acquisition of Warren, N.J.-based The Chubb Corp. in January and changed the name of the combined firm to Chubb. Twietmeyer joined ACE in 2000.
Companies in agriculture should assess their operations to identify activities with pollution risk, Richardson and Twietmeyer wrote. “These may include chemical tank use; fertilizer blending and sales; motor vehicle and mobile equipment storage and maintenance; transportation of fertilizers and chemicals: as well as the rinsing and cleaning of equipment and buildings that contain fertilizers, chemicals, residue or other materials that could wash downstream.”
For example, employees driving vehicles containing agricultural chemicals “should have the required hazardous materials training, and vehicles should display the correct placards to alert emergency personnel of potential hazards,” Chubb notes.
“Overall site drainage should be assessed to determine where any runoff that might include pollution could flow” in the event of a spill, Chubb states. “That includes nearby catch basins, or ditches that run away from the property into streams and rivers and any nearby streams. Where runoff presents an issue, activities should be moved to a better location on the property.”
Pollution risk in agriculture is “typically related to above- and below-ground petroleum and diesel fuel tanks, bulk chemical tanks, and fertilizer storage,” Richardson and Twietmeyer wrote. “In addition, the transportation of chemicals, pesticides, fuels and fertilizers can present significant risks.”
Spills “may be caused by human error, equipment failure or natural events such as tornados or floods,” the authors added. “Storm water runoff or effluent related to operations can lead to exposures. For example, rain that washes an uncovered concrete apron may send a trail of pollution across a property.”