The evolution of manufacturing techniques over the years has as much to do with the implementation and enforcement of environmental regulations as it does modern technology. Historically manufactures have had effects on the environment in ways such as smoke stacks and discarded hazardous and non-hazardous waste. Over the years the EPA and OSHA have increased the regulations placed on manufactures as well as the fines for failure to comply whether a violation was intentional or accidental.
Loss control specific to environmental risks has become a key component of most manufacturing processes. Many manufacturers also include an environmental insurance policy as part of their risk management program. (Even though environmental exposures can be linked to ordinary operations, most general liability, umbrella and excess insurance policies don’t cover expenses for clean-up, remediation and litigation resulting from pollution.) Depending on the policy, environmental insurance policies include coverage for items such as pollution and related personal injury, successor liability and property damage claims. These policies are tailored to the type of business they are insuring.
The following are a few samples of manufacturer environmental hazards:
- Manufacturing Process-Malfunctions of waste water treatment machinery that spills pollutants into drains and waterways.
- Storage Areas-Tanks, pipes and other storage areas that leak materials and chemicals.
- Exhaust and Fire Suppression-Malfunctioning systems that result in unintended emissions or release hazardous gases.
- Environment-Runoff and seepage that pollutes drinking water and damages protected natural areas.
- Clean Rooms-Releases from cleaning materials and supplies that may contaminate surrounding air and water.
- Waste Transportation-Accidental waste release during transportation that seeps into ground water and contaminates disposal sites.
Another topic worth mentioning is specific to the advances in technology and global conditions which can create unique exposures.
- Product Liability-A domestic policy may not cover lawsuits brought for defective or counterfeit products sold overseas.
- Employee Safety-Employees traveling abroad to visit manufacturing partners may not be protected under a general workers’ compensation policy.
- Supply Chain Interruption-Natural catastrophes or political turmoil can damage complex manufacturing equipment and processes worldwide.
- Cargo Theft-Valuable end-product components on long transits offer a lucrative opportunity for cargo thieves.
- Regulatory Compliance-Varying foreign regulations regarding admitted verses non-admitted carriers may prevent an incident from triggering coverage.
- Cyber Breach-Global companies often work with manufacturing partners in regions already at high risk for a data breach.
At the Armstrong Company Insurance Consultants we strive to educate our clients on risk assessment, loss control and insurance issues. Contact us today! We are always here to be of service to you!