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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.

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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).

 

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

READ MORE HERE

 

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.

By: Kari Dybdahl

April 2019

Biohazard Work: New Opportunities, New Risks.

With the new ANSI/IICRC S540-2017 Standard for Trauma and Crime Scene Cleanup, more and more restoration contractors are capitalizing on the opportunity to train and take on these complex projects. When you are going to a new job, the question, “Do I have the right insurance?” probably doesn’t come to mind. You are not alone, and that is why we have Kari’s Korner to answer any lingering insurance questions out there. So, let’s find out: Do you have proper trauma and crime scene cleanup insurance?

  Read More Kari’s Korner HERE

Let’s say you do purchase a Contractors Pollution Liability policy. Did you know there are over 144 policy variations to a CPL policy? I didn’t either until I attended the Society of Environmental Insurance Professionals conference. It is safe to say not all pollution policies are the same. Since they were created for contractors cleaning up nuclear waste facilities and Superfund sites, the policy needs to be significantly altered for fire and water restoration contractors, mold remediators, and trauma and crime scene cleanup professionals.


There are over 144 policy variations to a CPL policy

 


By: David Dybdahl

There are significant changes in the insurance marketplace in store for restoration contractors in 2019. These changes will adversely affect many restoration firms, some a lot more than others. The good news is if you know the changes are coming, you should be able to avoid significant insurance availability issues and/or premium increases in the coming years. In this article, I will detail the changes underfoot in the insurance market for restoration firms and lay out the options to get ahead of the impending insurance cost and availability problems many restoration firms will face over the next few years.

Here is what the future holds in 2019:

  1. Material insurance rate increases for General Liability and Environmental Insurance.
  2. Tighter insurance requirements and verification of compliance.
  3. Customer requests for higher limits of liability.

All of this will happen in the face of decreasing availability of business insurance options as history repeats itself. Insurance companies that sold policies for too little premium over the past few years are running from the restoration class of business the same way they did in 2002 when the “toxic” mold insurance crisis made finding liability insurance difficult.

A lot of the change in the insurance marketplace for restoration contractors is due to poor loss ratios. A loss ratio is calculated by taking the total money paid out for claims divided by the total dollars contractors paid for their insurance. When it comes to restoration contractors, insurance companies have paid out much more for losses than anticipated; in fact, some paid more in claims expenses than they actually brought in in premium dollars.

Read More HERE

WHEN INSURANCE COVERAGE MAY BE COMPLETELY WORTHLESS

As a carpet cleaner, you would think your commercial insurance policy would cover damage to the work you do and mistakes that might happen. Think again.

WHEN INSURANCE COVERAGE MAY BE COMPLETELY WORTHLESS

by: Kari Dybdahl

Attention all carpet cleaners!

The carpet, rugs, and upholstery you work on may not be covered by your general liability policy in the way that you may think…

Most of you, I’m sure, are familiar with general liability (GL) insurance coverage as you carry it to protect your business in the event of some kind of claim for damages resulting from your operations. GL policies are designed to respond to claims for bodily injury or property damage in a general sense; essentially, someone getting hurt or something being damaged resulting form your operations.

However, exclusions in GL policies limit or restrict coverage. The exclusion of interest in this post is the Damage to Your Work exclusion. I won’t bore you with the full policy legalese (although if you’re interested, I’d be happy to). The gist is, due to that exclusion, your GL insurance would not apply to property damage to “your work” arising out of your operations. Read the Full Article.

4 Cs of Insurance Purchasing

Use these tips to ensure your company is safeguarded against the risks of your work.

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4 Cs of Insurance Purchasing

When I speak with cleaning and restoration professionals one of the first questions I ask is, “What do you dislike most about insurance?” It’s a loaded question, but it really does help me figure out what you value about insurance and what I can do to fulfill that.

Most people respond that their insurance agents don’t know what they do for a living. Restoration contractors especially say they must explain to their insurance agents — every renewal — that they are neither janitors nor carpet cleaners in order to have that taken off their liability policies. Does this sound familiar to you?

The next question I ask is, “What do you like the most about insurance?” The response I generally receive is that they like how it is an extra level of protection for their businesses. This is certainly accurate. The overall function of insurance is to provide the insured with financial assurance for the liabilities they take on and to be there when something catastrophic happens to help avoid bankruptcy or closing your business.

In my day-to-day work, I often hear that insurance costs too much. This could be true as well. Insurance is transferring the risks you take on to someone else in exchange for a premium. The premium charged should be minimal to the overall risk you take on.

Let’s say you are doing a Category 3 water job at a large commercial building valued at $15 million. If the job were to go wrong, what is the worst that could happen? Say you burn the building down, causing $15 million in damages; meanwhile, your annual liability premiums are $20,000. In this case, $20,000 is relatively minimal to the $15million dollars of risk you took on.

In this article, I will help solve the challenge of saving premium dollars while maintaining adequate insurance for your business. The simple way to do this is to follow the “four Cs of insurance purchasing,” which you should follow when looking over your insurance program. Three of the Cs affect you 365 days out of the year. One C will affect you only one day out of the year. Can you guess which C that is?

Kari Dybdahl : Kari@armr.net

“Insurance purchasing should not be stressful for you as the insurance buyer. If you feel like something is off with your insurance, it probably is. Ignoring the problem won’t fix it.”

 

What ‘Your Work’ Means for a Restoration Contractor

As a restoration professional, you would think your commercial insurance policy would cover damage to the work you do and mistakes that might happen. That might not be the case.

 

By Kari Dybdahl

In the last “Kari’s Korner,” I wrote about what “your work” means for a carpet cleaner regarding insurance.

This month I am going to carry that same topic on to a restoration contractor. Many may be thinking “your work” would be the same for all trade contractors. However, when operations involve regulating the relative humidity within a structure, we in the insurance industry look at “your work” on a more macro scale than the one thing you were called to a job to work on.

Although the way we look at “your work” as a restoration contractor is a bit different from how we look at a carpet cleaner, the core concept remains the same. In general, “your work” is the thing you were called to work on. As a carpet cleaner “your work” is the carpet you were called to clean.

What would “your work” as a water extraction or restoration contractor dispatched to a flooded home be in the eyes of an insurance company? Well, “your work” is the thing you were called in to work on, which is bringing down the relative humidity in that entire home. One would say the whole home is “your work”!

The “your work” exclusions on your General Liability policy and Contractors Environmental Liability policy exclude coverage for property damage to “your work” arising out of your operations. In the case of a restoration contractor at a water-damaged home, “your work” applies to the entire home; in theory, you have no coverage for any damage to that home caused by your operations.

Imagine one of your dehumidifiers short-circuits and starts a fire, burning down the entire home. We would expect the “your work” exclusion to trigger, because the property damage to the home from the fire resulted from your operations. It would exclude coverage for the whole loss because “your work” was the entire home. Therefore, “your work” exclusions are especially deadly for restoration contractors.

The good news is solutions exist to fix this immense gap in coverage. There are wholesale insurance brokers specializing in your industry that can help.