Pollution After A Hurricane

Examining increased environmental exposures due to weather events.
By: Kari Dybdahl 

We know that General Liability and Property policies sold to commercial property owners have various pollution exclusions. What happens when mold starts to grow on the walls or the bacteria needs to be remediated?

We’ve all seen the news or have spoken to others about the current weather events. For some of us, we dodged the bullet. But millions of people and businesses were and are right in harm’s way.

Hurricanes cause an extensive amount of damage to economies, cultures and infrastructures. They pose an enormous amount of environmental loss exposures to both homes and commercial properties. Distribution warehouses, for example, that hold various chemicals that were in a safe place prior to the weather events, may have now been compromised, with chemicals released into flood waters or burned by the wild fires. Depending on the reaction a certain chemical has with water or fire, it could be immediately harmful to the nearby natural resources and people.

Hurricanes pose even more of an environmental loss exposure with the sheer amount of water intruding into commercial properties and homes. Mold can colonize rapidly within 72 hours of water damage, if the conditions are perfect. Since mold is naturally occurring, it needs a food source, water and heat to colonize and grow. Drywall is a great food source for mold as it is easy for the spores to digest. With the right amount of food, water and heat a commercial property can become a petri dish very fast if relative humidity is not under 40%. Bacteria is even more of a threat to humans and reproduces faster than mold. Bacteria colonies can grow 100% every 20 minutes with the right conditions. It is said that there are over one million different species of bacteria, and legionella is just one of those. Hurricanes and rain storms are the ideal situation for mold and bacteria growth, resulting in almost every fungi and bacteria sublimit and exclusion to trigger GL and property policies for commercial properties.

We know that General Liability and Property policies sold to commercial property owners have various pollution exclusions. What happens when mold starts to grow on the walls or the bacteria needs to be remediated? A fire and water restoration contractor must step in to help. I recently spotted a photo online of a whole neighborhood in Houston that appeared to be a ghost town. Not a restoration contractor in sight. I started to wonder how that could be, when many restoration contractors had been in Houston helping rebuild. I learned that restoration contractors generally will not work on a property (home or commercial space) if that property is not insured for fungi or bacteria, due to fact that the chance they will end up being paid for their work is slim to none.

In 2017 PBS.org reported that 80% of homeowners in Houston that were underwater due to hurricane Harvey did not have flood insurance even though coverage was readily available. The National Flood Insurance Program is currently $20 billion in debt. Rep. Jeb Hensarling, R-Texas and others stated that the national flood program in its current form is not sustainable. Even if commercial properties could buy flood insurance that would include the effects from fungi, mold and bacteria, they are still taking a massive risk on environmental loss exposures in the program.

What about the commercial properties that didn’t purchase flood insurance from the national program? The majority of property policies sold to commercial property owners and managers have $15,000 sub limits, according to a recent webinar cohosted by Swiss Re Corporate Solutions. ISO forms have a have this $15,000 sublimit to highlight that mold, bacteria and fungi is not something they want to cover on ISO forms. The issue here is the average mold job on a commercial property is $250,000.

Commercial properties are going to feel the effects for many years to come. The more the flood waters linger, the more mold and bacteria growth in those commercial properties trigger the pollution, fungi and bacteria exclusions on GL and property policies.

As we see a shift in weather patterns, I anticipate more flooding in cities that do not have a storm water system infrastructure to support the amount of rain fall, resulting in more mass flooding and more environmental loss exposures for commercial properties.

Find Out More About ARMR HPR Here

What’s an Agency to Do? Document…Document…Document
Protect yourself and make the offer and, of course, document it! Just like you would with someone in a special hazard flood zone that didn’t purchase coverage or someone that turns down uninsured motorist. Make the offer to investigate. Ask them if they have risk management processes for environmental loss exposures for liability and property. Offer the ARMR HPR program. If they say “yes,” Big “I” Markets makes it easy. If they say “no thanks,” document with DocuSign. (Pro tip: Big “I” members new to DocuSign receive 20% off of their Standard or Business Pro plans. Find out more at www.docusign.com/iiaba.)

Over the past three years we have been creating a risk management and insurance program for commercial properties that incorporates a proactive environmental loss exposure management plan prior to a loss as well as the procurement of a specially designed environmental site pollution liability policy if a loss were to occur. This program is exclusive through ARMR.Network. For more information along with agency specific sell sheets for you to pass along to your commercial property owner and manager prospects and clients, please reach out to us on Big “I” Markets under Pollution Contractors-FarmUSTs-Other.

To provide you with an indication we just need to see the statement of values for the property portfolio. The information you send your property underwriter will work great. It will take us about 24 hours to turn around an indication for site pollution liability, including mold, fungus, bacteria as well as incorporating the proactive emergency response plan at no cost to your client. If the client or prospect is interested, you will gather the additional underwriting information needed and we will release a formal option to bind. It is that simple!

With the increase in weather events, commercial property owners and managers must be looking into how to better manage their environmental loss exposures. What is stopping barrels of alcohol being blown into a river and killing the natural resources for miles when a storm hits? Nothing.

To close the gap in coverage for environmental loss exposures caused by GL and property policies, every commercial property owner and manager should consider the ARMR commercial property program or else they will be unknowingly underinsured for those exposures. Your commercial property owners and manager clients and prospects are relying on you as the insurance professional to inform them they have a problem. I do not want to see you caught up in a potential E&O situation because the solution of covering environmental loss exposures was not offered to them.

ARMR.Network is your environmental insurance resource. You can find us on Big “I” Markets or just reach out to me with any questions you may have at kari@armr.net. We look forward to hearing from you!  

With the increase in weather events, commercial property owners and managers must be looking into how to better manage their environmental loss exposures. What is stopping barrels of alcohol being blown into a river and killing the natural resources for miles when a storm hits? Nothing.



Major issues to watch out for:

  • Restrictions or limitation on storage and/or duration of storage for personal property of others
  • No coverage for property in transit
  • Exclusion for property for which you issue a receipt or record of storage
  • Coverage is not provided on a direct physical loss basis
  • Low/inadequate limits of insurance

Read More Here

Coverage for Contents Cleaning

by: David Dybdahl and Aaron Millonzi

Over the last few years, contents cleaning and restoration has become an important service for restoration and remediation contractors to provide. Not only can it be profitable, it also offers contractors the opportunity to set themselves apart from their competitors. Innovations in methods and new technology have made it not only easier, but also less expensive and safer to perform these services. As you consider adding this as something your firm offers, I strongly encourage you to consider how this will affect your insurance situation. More specifically, it’s important that you confirm your business is adequately covered should you add this service, because many restoration and remediation firms are not!

The exclusion states there is no coverage for property in the care, custody or control (CCC) of the insured, but what exactly does that mean? The general consensus is this:

  • “Care” refers to temporary charge of personal property (i.e. you’re in charge of the stuff),
  • “Custody” implies a keeping or guarding of that property (i.e. you’re keeping it safe), and
  • “Control” refers to power or authority to manage, superintend, direct or oversee (i.e. you can do what you want with it).


In Search of Sasquatch and Construction Defect Insurance


Make A Statement

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By: David Dybdahl 

Neither Sasquatch nor construction defect insurance exists, but producers with personal take-home pay incentives promote the hopeful but futile search for both.

What do sightings have to do with insurance coverage for construction defect claims? There are amazing similarities. Both are simply concepts of the imagination. For both, there are folks who benefit on a personal, take-home-pay basis from the continued search for the nonexistent. In the search for the Sasquatch, it is the TV producers that are making money in the whimsical pursuit of the nonexistent critter.


In the mythical world of construction defect insurance, it is the insurance producers that stand to gain monetarily by unconfirmed sightings. In that world, things are not so whimsical. It is a lot better to be accurate and realistic in discussions regarding coverage for construction defects. Unfortunately, insurance marketing can get in the way of reality.

Truth In Labeling.


Indoor Environmental Loss Exposures

in Condos, Schools, Hospitality, and Other Commercial Properties

By Aaron Millonzi, Knowledge Coordinator and David Dybdahl, President & CEO – American Risk Management Resources Network, LLC

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Are your clients covered?
Probably not! 

What comes to mind when you imagine a property that needs to purchase pollution insurance? It’s probably something like a chemical mix and blend facility, a manufacturing plant, or maybe a landfill. Odds are it’s not a standard condominium or apartment building, an elementary school, or commercial office building that houses an insurance agency, an investment brokerage firm, and a dental office. For many, the thought that something as innocent as a school or as common as a commercial office building has environmental loss exposures is laughable. The truth is it’s not as far-fetched as it may seem. In fact, every property or location carries some risk of a contamination loss and therefore needs specially designed environmental insurance coverage to protect them against these loss exposures, even the most unsuspecting ones.

Really Important Things Every Insurance Agent Needs to Know

  • 60% of all property insurance losses involve water intrusion indoors.
  • Moist drywall will grow mold (fungi) at room temperature within 3 days.
  • Drinking water on carpeting will morph into bacteria contaminated Category 3 water within 3 days.
  • Every drop of water in a drainpipe is Category 3 water because of the bacteria in it.
  • Property insurance policies have sublimits (completely inadequate) for fungi or bacteria.
  • The average commercial property mold remediation without business interruption expense is $250,000; the average sublimit is $15,000.
  • Mold is an allergen; bacteria contamination can be fatal.
  • GL policies usually have complete exclusions for losses in any way associated with fungi or bacteria contaminants.
  • Environmental insurance was originally designed for outdoor use, not indoor.

What are the environmental loss exposures that condo buildings, schools, and office buildings possess and why do they need environmental insurance to cover them? These properties can have a wide array of pollution loss exposures, from exposures to asbestos and lead, to a leaking underground storage tank; however, the most common pollution loss exposures for these types of properties revolve around indoor air quality. The driver of most indoor contamination losses is water intrusion in a building. All structures are prone to mold or fungi claims and bacteria-related losses. But why do water losses in building create environmental loss exposures which now require the purchase of environmental insurance? The answer to this question is a little more complicated.

The gist of it is pollution exclusions and contaminant-specific exclusions such as fungi or bacteria exclusions on standard commercial property and liability insurance policies. These exclusions drive the need for environmental insurance. In addition to these exclusions, there are also various sublimits for things like pollutant cleanup and mold- and bacteria-related losses. These exclusions and sublimits render standard property and liability insurance policies inadequate or completely ineffective in terms of providing coverage for the contamination loss exposures faced by many commercial properties, education facilities, and large residential buildings. This in turn requires the purchase of environmental insurance products designed for indoor use to fill the coverage gaps created by the exclusions and sublimits in both property and liability insurance policies.

While condo buildings, schools, and commercial office buildings can be affected by pollution exclusions or sublimits, it’s the contaminant-specific exclusions, particularly fungi or bacteria exclusions and sublimits, that really do them in. Sixty (60) percent of commercial property insurance losses involve water damage within a structure, and that’s not including flood losses. Moisture on drywall can result in mold growth in as little as 72 hours, even sooner in the right conditions. As soon as the m-word is involved in a property loss, it triggers the fungus/mold/bacteria exclusion on the property policy; in many cases, the policy has an additional, limited coverage for fungus/mold/bacteria-related losses, but it comes with a significant sublimit. This sublimit can vary, but is often around $15,000. It helps to know that an average mold remediation job on a commercial building is $250,000. That’s a pretty big gap in coverage – something many property owners are shocked to discover when they have a mold or category 3 water loss and expect to be fully covered under their commercial property policy.

Mold claims are not new. The good news for property owners is that in the past, these claims have been paid by claim adjusters who were not familiar with the actual workings of mold exclusions as standard water intrusion claims and therefore not subject to significant sublimits. The bad news is the tide is changing. It’s clear that more and more of more claims are being excluded on standard property insurance policies. We know this because mold claims are being paid on environmental site policies. In fact, it was revealed by a panel of insurance company executives at the Society of Environmental Insurance Professionals conference in June of 2017 that mold claims had eclipsed every other type of loss as the number one source of claims on environmental impairment liability (EIL) policies. As property claims adjusters get smarter and start pulling the trigger on fungus/mold/bacteria exclusions and sublimits, this will only continue to drive the need for environmental insurance to cover commercial property owners for their fungus/mold/bacteria exposures.

In the early 2000’s there was a “toxic mold” media frenzy which was the impetus of the new ever present fungi or bacteria exclusions. Today there’s another “pollutant” that’s been making headlines recently: bacteria.

Legionella bacteria has become well-known, because of Legionnaires’ disease outbreaks. Legionnaires’ disease is a is a very serious type of pneumonia (lung infection) caused by Legionella bacteria. In nature, Legionella bacteria exists in things like rivers and lakes and usually does not cause illness. This type of bacteria creates a health risk when it aerosolizes into tiny water droplets in the air that people breathe in. In the built environment Legionnaires disease is most commonly caused from a water source that is not properly maintained. Some common sources are HVAC cooling towers, hot tubs, decorative fountains and falling water features, hot water tanks and heaters, and plumbing systems. Almost every commercial building, school, hotel, and condo building has one or more of these potential sources of bacteria contamination. Therefore, these facilities are at risk for spreading Legionella bacteria and making people sick. These outbreaks commonly result in a bodily injury claim for seven figure damages by those affected or by their family members and almost always require legal defense.

In these situations, most businesses turn to their liability insurance policy for defense and payment of damages, the most common policy being the Commercial General Liability (CGL) policy. Unfortunately, like standard property insurance policies, most CGL policies contain a pollution exclusion as well as additional contaminant-specific exclusions such as a fungi or bacteria exclusions. Unlike most property insurance policies, the majority of CGL policies do not have sublimits for fungi, mold or bacteria-related losses. In fact, these exclusions not only preclude coverage for damages, but they also relieve the insurance company from having to provide legal defense on behalf of the insured. This leaves the business or property owner completely on their own to defend themselves and pay any claims for bodily injury or wrongful death. This has become a common occurrence with many of the Legionnaires’ disease outbreaks over the past few years.

Alas, there is environmental insurance designed to cover these very loss exposures. Well-designed programs provide both liability coverage for claims brought against the insured and cleanup and remediation of pollutants, including mold and bacteria losses. One product in particular is ARMR HPR™. It combines a full-service site pollution liability policy with built-in boots-on-the-ground loss control; coverage is specifically tailored to the indoor environment and it affordably priced, typically at 10% of the property insurance premium. Visit our page, Pollution Insurance: Contractors-Commercial Properties-USTs-All Other, on Big “I” Markets to submit a risk and learn more!

The main takeaway is properties like commercial office buildings, schools, hotels, and condo buildings all have pollution loss exposures and need to purchase environmental insurance to adequately cover themselves for these risks. Their greatest pollution loss exposures involve indoor air quality issues such as mold growth and bacteria exposure to the occupants. Pollution exclusions and pollutant-specific exclusions like fungi or bacteria exclusions on standard property and liability insurance policies render these policies inadequate or completely ineffective at providing coverage for these loss exposures. It’s important to understand this, communicate it to insureds, and encourage them to purchase environmental insurance that is designed to provide coverage for the pollution loss exposures they face.

David Dybdahl, an environmental insurance veteran and expert witness, says it best: “Agents that leave their customers uninformed about the far-reaching effects of the mold or bacteria sublimits are in for a rough ride when their clients realize the typical $10,000 fungi and bacteria sublimit applies to their $600,000 water loss. The ARMR HPR™ product line is easy to use – we can get pricing indications out the door based simply on the property insurance schedule.”

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BIG-I Two For Tuesday: July 2019


Green CleanING is NOT Risk Free

By; David Dybdahl & Aaron Millonzi
July 2019

As the green cleaning trend ramps up, I’m sure many of you are considering implementing this as a service offered by your company. It seems like a no-brainer. Provide something people want and do good for the planet at the same by using more environmentally-friendly products and procedures. But these aren’t the only environmental products you need to purchase for your business to properly and safely operate as a green restoration, remediation, and cleaning professional. You also need to buy an environmental insurance product called Contractor’s Environmental Liability insurance.

Read More HERE


What Drives Insurance Premiums?


Once a year we have to write a dreaded check to our insurance agent for insurance coverage. In my past article about the 4 Cs of insurance , I introduced that one of the Cs is cost. In the insurance world, we refer to the cost of insurance as the premium. Have you ever wondered how insurance companies come up with the premium amount for the coverage you purchase? When I attend the various restoration and cleaning industry conferences, I like to ask, “What is one thing you dislike about insurance?” I’ve heard a handful of interesting responses over the past 10 years, to say the least, but the most common response is that the cost of insurance is too high.

Contractors are not alone in this sentiment; I’ve never met anyone who has felt that they’re not paying enough for their insurance. However, like taxes, the cost of insurance is simply another one of those necessities in life.

Perhaps getting a better understanding of how insurance companies come up with the premiums they charge can make this pill a little easier to swallow. The determination of risk by the insurance company, also known as rating, is the process of how underwriters decide on the premium to charge for the insurance coverage being offered. The determination criteria vary by the type of insurance coverage offered. For example, an auto policy would have different criteria than a General Liability policy or property insurance; however, there are some similarities.

Insurance is a costly but necessary business expense. Read on to find out what factors are impacting the cost of your insurance premiums.

Four Factors of Insurance Premiums

By Kari Dybdahl



Green Cleaning is NOT Risk-Free

July 10th, 2019 : David Dybdahl & Aaron Millonzi

Green Cleaning is NOT Risk-Free

As the green cleaning trend ramps up, I’m sure many of you are considering implementing this as a service offered by your company. It seems like a no-brainer. Provide something people want and do good for the planet at the same by using more environmentally-friendly products and procedures. But these aren’t the only environmental products you need to purchase for your business to properly and safely operate as a green restoration, remediation, and cleaning professional. You also need to buy an environmental insurance product called Contractor’s Environmental Liability insurance.

What is Contractor’s Environmental Liability (CEL) insurance and why do you need it? CEL insurance, commonly referred to as Contractor’s Pollution Liability (CPL) insurance coverage, is a special type of liability coverage, similar to your Commercial General Liability (GL) coverage but also quite different. CEL coverage responds to claims or lawsuits against your company for bodily injury, property damage, or clean-up costs resulting from a pollution condition arising out of your work. It will also provide coverage for defense costs incurred for defending your business in court in the event of a claim or lawsuit against you. Essentially, it provides protection for you and your business if a customer or another third party comes after you for damages that were caused by a contaminant that they claim arose out of the work you did.

Why Insurance is the Most Logical Form
of Financial Assurance For
Compensatory Mitigation Projects

By David Dybdahl

Read The Full Article


In my work as an insurance consultant for various governmental entities, I have participated in a few Proof of Financial Responsibility evaluation projects. A couple of times it was a project post-mortem to figure out why a financial assurance requirement was a failure in practice.  A common denominator in all of those projects was the financial assurance mechanism needed to be:

  • Reliable as a source of contingent future funding,
  • Totally independent from the financial fortunes of the regulated party,
  • Cost effective, and
  • Supportive of the regulated community.

The financial assurance requirements in wetland mitigation work share these primary objectives.

However, in practice regulators often work in ways that undermine achieving one or more of these objectives. Nowhere is this more evident than in the use of the insurance mechanism as proof of financial responsibility in wetland mitigation projects.  I doubt if anyone set out to create significant obstacles for the use of insurance for wetland financial assurance; it just turned out that way, usually as a result of false assumptions and lack of information on insurance custom and practice in the regulator community.

Pollution Exclusions in Insurance Contracts

Avoiding Confusion and Litigation By David Dybdahl
May 2019

This article was originally published in the Spring 2019 issue of Insights: A Professional Journal by the CPCU Society and is shared with permission from The Institutes CPCU Society. © The Society For Chartered Property Casualty Underwriters. All rights reserved. www.CPCUSociety.org


“The most common environmental risks arise from water intrusion in the built environment.”

Avoiding Confusion and Litigation

Pollution Exclusions in Insurance Contracts

This article sheds light on pollution exclusions, limited
coverage give-backs, and the resulting coverage gaps that far
too often lead to unnecessary coverage litigation. It shares
the history of pollution exclusions and exposes the inherent
flaws with limited coverage give-backs for contamination
losses. Readers will gain perspective on pollution exclusions
that are often ignored, which needlessly harms policyholders,
who should know that reliable coverage solutions are readily
available in the environmental insurance marketplace.

Pollution exclusions have created historic levels of insurance litigation.
Coverage litigation usually occurs when the buyer and seller of an insurance policy have different ideas of how coverage should work in a claims situation. Accurate labeling of pollution exclusions in insurance contracts and the use of appropriate forms of environmental insurance policies in insurance program designs would likely avert a lot of coverage litigation for pollution and contamination losses.
Specifically, most such litigation could be avoided if insurance practitioners followed a two-step process when designing insurance programs

  Read the Full Aritcle HERE