Property managers and apartment owners are contractually responsible for maintaining the condition of the residences they manage. Standard property and liability policies protect managers and owners from typical bodily injury and property damage claims.
But what most property owners don’t realize is that standard property and liability insurance typically excludes coverage for a critical exposure area: pollutants.
Insurance policies are very broad in their definition of “pollutants.” Most policies define pollutants as “any solid, liquid, gaseous, or thermal irritant or contaminant.” In fact, in certain circumstances, things as benign as fresh water, cheese, and milk have been classified as “pollutants” by claims adjusters.
For a property owner, common pollution exposures include things like mold, diseases (i.e. Legionellis), sewage, asbestos, and illicit drug labs.
Pollutants pose two serious problems to property managers and property owners. First, they have the potential to cause all the residents in a building to become ill. Such illnesses leave managers/owners liable for bodily injury claims—which are not covered by a general liability policy. Second, pollutants can do serious damage to an apartment complex or the premise itself, and the cost to remove pollutants and repair the damages are generally excluded by a typical property policy.
The cost of a bodily injury claim is difficult to estimate because it largely depends on the severity or number of tenants affected. However, if illness or death occur, bodily injury claims can easily reach $1 million. Remediating the pollution from property/premise can be extremely expensive as well.
It is not uncommon for pollution-related costs to be hundreds of thousands of dollars.
The answer lies in adding a separate insurance policy to backfill the coverage limitations in the property and liability coverage. An environmental liability policy provides coverage to both the property owner and manager for bodily injury and property damage associated with pollutants (including clean-up costs).
For example, if a property becomes infested with mold after a water break, one policy can cover both the cost to remove the mold and any resulting bodily injury suits brought against the property manager or property owner.
That’s the solution Kingsgate Insurance offers our habitational clients.
Our clients have found this protection to be very affordable, especially when the policy is deployed on large schedules and has multiyear policy terms.
Kingsgate can place these policies for as little as $8-$18 per unit per year.
To serve managers with properties in the low-income market, Kingsgate has worked with government agencies to get this coverage included as an approved insurance budget item—and to include in the project’s insurance budget. When the owners or managers recognize the potential exposure that pollutants represent, including this coverage in their budget seems like a very good value.
All in all, the cost of coverage is very affordable compared to the losses owners can incur if a non-covered pollution-related incident happens.
Ask Kingsgate Insurance to review your current habitational policy to make sure your tenants, your staff, and your management company are protected.