Pollution Solution

The insurance industry calls them "pollution incidents," and they could mean financial devastation for your company. The reason? Your property and general liability insurance policies probably contain a pollution exclusion, which means "any damage that results from a pollution incident, either gradual leakage or sudden release of chemicals, or anything between those extremes, is an excluded cause of loss," says Robert Rosenfeld, director of the environmental risk management practice at Canon Insurance Service in Beverly Hills, California.

Of course, any coverage that insurance companies exclude from one policy, they'll offer in another-hence the introduction of pollution liability insurance. Rosenfeld says the coverage evolved soon after the tremendous amount of asbestos litigation in the 1970s. At that time, insurers decided to remove pollution liability from basic commercial policies and instead offer it separately. "This meant they could draft contracts that address pollution, and develop underwriting and rating models that specifically consider those issues," Rosenfeld says.