Pollution Solution Don't let pollution damage lead to financial damage.

The insurance industry calls them "pollutionincidents," and they could mean financial devastation for yourcompany. The reason? Your property and general liability insurancepolicies probably contain a pollution exclusion, which means"any damage that results from a pollution incident, eithergradual leakage or sudden release of chemicals, or anything betweenthose extremes, is an excluded cause of loss," says RobertRosenfeld, director of the environmental risk management practiceat Canon Insurance Service in Beverly Hills, California.

Of course, any coverage that insurance companies exclude fromone policy, they'll offer in another-hence the introduction ofpollution liability insurance. Rosenfeld says the coverage evolvedsoon after the tremendous amount of asbestos litigation in the1970s. At that time, insurers decided to remove pollution liabilityfrom basic commercial policies and instead offer it separately."This meant they could draft contracts that address pollution,and develop underwriting and rating models that specificallyconsider those issues," Rosenfeld says.

The most common use of pollution insurance is to protect buyers,sellers and lenders in commercial property transactions.Traditionally, buyers have hired environmental consultants toconduct site assessments, which usually take three to four weeks tocomplete at a typical cost of $3,000 to $5,000. In addition to thedelay involved, another drawback of site assessments is theyexpress the consultant's opinion of the condition of the siteat the present time and do not consider future discoveries orincidents.