To understand any insured's need for pollution liability insurance coverage, there are 10 situations to help identify potential pollution-related exposures. However, before reviewing these situations, consider this five-step program to help companies identify and remediate pollution hazards.

Step 1: Identify pollution hazards.

This first step involves taking a walk around the workplace to identify trouble spots. Ask employees to list hazards through face-to-face meetings or anonymous suggestion boxes; hold staff workshops, have discussions with peers at professional association meetings and conferences; become familiar with key links in the supply chain; read trade publications and hire a professional risk expert.

Step 2: Decide who might be harmed by these hazards and how.

After identifying the hazards, the next step is for the insured to understand whom they might harm. This can include employees, local homeowners and other businesses.

Step 3: Evaluate the risks and choose control measures.

After identifying pollution hazards, determine how to protect those at risk of being harmed. One obvious action is to remove hazards that can be reasonably eliminated. When a hazard cannot be entirely eliminated, steps should be taken to contain it.

Step 4: Make a physical record of your findings.

Record findings and share them with affected members of the insured's organization when appropriate. By recording an account of how the insured plans to either eliminate hazards or reduce the risk of their occurrence, there will be a physical record that hazards were identified, decisions were made about who could be harmed and how, and a plan was executed to eliminate or mitigate hazards.

Related: A look at environmental risks for property owners

Step 5: Formalize a process to periodically review and update your assessment.

Change is constant. This is true of the physical workplace, environmental factors including climate, the condition of machinery and other equipment, new or improved technology, employee skill levels and experience, supply chains and clients. This even includes products and services — each time the insured adds or even modifies a product or service, a fresh risk can be added to the business. Consequently, a process must be in place where the insured reviews and updates the risk assessment on an ongoing basis.

Uninsured pollution exposures

While oil and chemical companies are typically forward thinking when it comes to pollution exposures, many other companies unknowingly have uninsured pollution exposures. What's more, it is possible there are literally thousands of companies exposed and unaware of the significant financial risks they face.

While it is impossible for a risk analyst to know if a company is at risk without reading the liability insurance policy, here are 10 situations to help identify potential pollution-related exposures.

1. |

   1. An air compressor fails and the operating hydraulic fluid leaks, contaminating a property or causing bodily injury to a third party.

   2. An ammonia refrigeration system leaks, disrupting your operations or those of a third-party facility, causing a shut down.

   3. A facility adjacent to the insured's plant has a chemical leak, causing the company to shut down for several weeks until the EPA deems it safe for employees to return to work.

   4. A product is ingested, causing a bodily injury or hypersensitivity allegation.

   5. A product “contaminates” another's product or manufacturing equipment.

   6. Process wastewater runs into a nearby stream.

   7. A fire at the insured's facility creates smoke and a terrible odor, causing the surrounding residential neighborhood to allege impairment and the filing of multiple lawsuits against the insured.

   8. Dust released from a cyclonic collecting tower causes alleged bodily injury to a third party as well as extensive damage to your property. The EPA also mandates a cessation of operations during the cleanup process, which severely disrupts an insured'srevenue stream.

   9. A residential facility or nursing home fields complaints of mold or Legionella, which leads to lawsuits alleging bodily injury, the shutdown of the facility, and lost profits, rents and reputation.

   10. Paint, or some other type of liquid substance (pollutant), runs off the insured's facility into a nearby drain or stream.

Being aware of the risks allows owners to employ strategies to mitigate their impact and recover more quickly after a disaster. A strong risk management program considers a wide variety of dangers and solutions to prevent or alleviate them.

Related: When is a policy's pollution exclusion applicable to contractor damage?

Brian Heun ([email protected]) is the sales and relationship manager and a partner at KMRD Partners, Inc., a nationally recognized risk and human capital management consulting and insurance brokerage firm located in the Philadelphia region and serving clients worldwide.