Any company involved in the food processing and handling sector should be carrying insurance coverage that is specialized or tailored to agribusiness A standard general liability insurance policy simply does not cover all the myriad of possible losses that companies within this industry face. In addition to an agribusiness insurance program, companies within this sector should also carry pollution coverage.
What is pollution coverage?
Pollution coverage or environmental impairment liability coverage is usually carried along with a specialized agribusiness insurance program. While agribusiness coverage can provide protection against the consequences of weather, animal mortality, food borne illness and product recall issues, pollution coverage deals specifically with pollution hazards and your company, in the event of a chemical spill or problem with animal waste.
What does first party coverage mean?
Environmental impairment liability insurance policies are not standard and vary from insurance company to insurance company. A pollution insurance policy should have two parts: first party and third party coverage. First party coverage means that the insurance carrier will pay the costs associated with your chemical spill or any other issue that requires a concerted clean-up effort. For example, if a chemical used in your business leaks into the ground surrounding your property, first party insurance will pay for proper clean-up.
What does third party coverage mean?
The second part of a pollution insurance policy is third party coverage. This protects your company against allegations that a chemical spill or other pollution event caused harm to other people or damage to their property. For example, if you use ammonia in the refrigeration system of your processing plant and some of it leaks into the air, it might cause an evacuation of the surrounding neighborhood. A third party policy will help you pay for the costs stemming from the evacuation and any lawsuits that arise from it.
This kind of coverage can also be designed to kick in if a pollution spill occurs when your products are being transported by a third party, such as by truck or by train. Even though your product is in the care, custody and control of the transportation company, you should expect to be sued if there is a spill.
How can this save my bottom line?
This kind of specialized coverage is not required by law. It can be, however, the one thing that stands between your company and bankruptcy. Accidents do happen, and if you accidentally leak chemicals on your property, and that accident then causes harm to others, the settlements can range from thousands to hundreds of thousands of dollars, and sometimes more. Ask yourself if your company can weather such a storm. Most companies cannot, not without proper insurance coverage.
This kind of coverage has an added, intangible benefit. It can be the one thing that salvages your company’s reputation after such an accident. If your company is able to step in and clean things up immediately and handle potential lawsuits with ease, then you have managed a catastrophic PR nightmare with ease. In no time, the incident will be cleared up and you can continue about your usual business.
It also forges a bond of trust between your company and the companies you do business with and the people who buy your products. The proper comprehensive insurance coverage will help you maintain your stature as a responsible and caring company.