Down and Dirty

Some property managers advise co-op and condo boards that there’s no such thing as too much insurance coverage. Given the times we live in, many boards are now considering – and buying – policies to protect themselves against dangers that were unimaginable even a few years ago, such as cyber-theft or sexual harassment. And then there’s pollution insurance, also known as environmental insurance.

“The main reason I advise boards to buy such a policy is to protect themselves in the event of an oil spill,” says Michael Schwarz, president of the SYMS Insurance Agency, a brokerage. “It could be any type of accident with the oil tank, such as a crack in the tank. Some general liability policies exclude coverage for claims resulting from lead exposure. Pollution insurance covers it, though there’s usually a $50,000 deductible.”

That shouldn’t be a deterrent to boards, in the opinion of Josh Koppel, president of HSC Management. “A $50,000 deductible is nothing if you’re getting sued for $5 million,” he says. “Pollution insurance is not expensive, and it’s another layer of protection.”

The policies typically cost about $1,000 to $1,500 a year for $1 million of coverage per incident, with a $2 million aggregate, Schwarz says. It’s possible to buy coverage as high as $50 million. The policies help cover the costs associated with pollution clean-up, and they cover liability claims for pollution-related injuries, illnesses, or deaths. Pollution policies can cover any type of small-scale pollution that causes contamination of soil, groundwater, or property. They can also provide coverage for air-borne contaminants, such as smoke, dust, emissions, and chemicals.

Clean-up costs may be the best reason to buy a pollution insurance policy, according to Michael Wolfe, president of Midboro Management. “Suppose you have a pristine building,” he says, “and your next-door neighbor’s oil tank leaks into your basement. Your pollution policy will cover the clean-up.”

Pollution insurance may not be right for every building. “We recommend it if the building has exposure,” says Eric Eggert, an insurance broker with Mackoul Risk Solutions. “The main exposure in the city is oil tanks. Another is swimming pools with lots of chemicals. If oil leaks and goes into the ground, the clean-up can cost hundreds of thousands of dollars, easily. We don’t recommend it for all boards, but I’ve seen cases where we recommended it, the board didn’t buy it, and then they had an oil leak. They were on their own.”