May 24, 2016
Author: Patrick Brouillette
Pollution Liability is an exposure for all motor carriers that tends to be overlooked more often than not. The Motor Carrier Act of 1980 includes a requirement for a special endorsement to auto liability policies, called an MCS-90. This endorsement requires that liability coverage apply to environmental restoration as well as bodily injury and property damage. The requirement is meant to restore the “environment” after the result of an auto accident that includes accidental release of a commodity or product transported by a motor carrier. Anything can be considered a pollutant/contaminate if it is somewhere that it does not belong. Does your liability coverage cover you the right way based on the Motor Carrier Act of 1980?
When thinking of pollution liability, consider your exposures and what you would be covering in the result of an accident. The pollution liability exposures for motor carriers are:
- Contamination to water – streams, rivers, reservoirs or other water supplies
- Contamination that effects the air
- Anything else that may result in damage or injury to any individual.
However, as those may be the three main pollution exposures for motor carriers, the biggest exposure could be the out of pocket expense if your insurance policy doesn’t have broaden pollution coverage or a separate pollution liability limit.
A key aspect to look for when going through your policy, or to ask about when purchasing auto liability coverage, is to see if there is a Broadened Pollution Endorsement (CA 9948) included. Given the rules of the MCS-90, the insurance company puts out to the DOT that they have the funds to pay for the damage and destruction resulting from an accident. This endorsement includes removal costs of the pollutant and ALL the costs necessary to minimize damage to human health, the natural environment, and animals. A real life example of how this could be detrimental to a motor carrier would be a gas or oil leak that gets into a water stream. Without this endorsement, the motor carrier could wind up having to pay the insurance company back for anything that was paid out.
So where can this coverage be purchased if broadened pollution is not available on the auto liability policy? If the insurance carrier truly doesn’t offer the broadened pollution endorsement, then a motor carrier would need a stand-alone pollution policy to cover this exposure. It is also possible that pollution liability can be combined with a general liability policy. By doing a shared limit, a motor carrier might receive coverage for General Liability, Transportation Pollution Liability, and Environmental Impairment Liability.
The environment continues to be a hot topic in our world. Pollution of any kind resulting from an accident can break a company, ultimately putting them out of business. Making sure that you have broadened pollution coverage or a separate pollution policy will ensure that you are doing your best to protect your company against these sometimes catastrophic losses.