Tip Sheet on Environmental Risks – Pollution
Since an environmental accident can turn out to be much more extensive or complex than initially expected, it is crucial that representatives be fully aware of the limits of their knowledge and skills before accepting and undertaking a mandate. This applies both when conducting the needs analysis and proposing coverage (s. 16 and 17, Code of ethics of damage insurance representatives), as well as in the event of a loss and a potential claim (s. 26 and 27 Code of ethics of claims adjusters).
This tip sheet is designed to help agents, brokers and claims adjusters (both in personal-lines and business-lines insurance) better understand the issues surrounding environmental risks. Please note, only pollution-related risks will be discussed here, not natural disasters.
Important: In general, the Insurance Bureau of Canada’s (IBC) standard insurance forms exclude pollution risk. The IBC does, however, offer endorsements that provide certain types of pollution-related coverage under very specific circumstances. Although the majority of insurers model their own forms on the IBC’s forms, some modify their contracts. You must therefore carefully read the contract and understand the issues at stake before advising your client.
Changes to IBC forms
The wording of the IBC’s home insurance forms was revised in July 2016; the new forms came into force in June 2017. In particular, the scope of the pollution exclusion has been clarified and certain extensions of coverage have been added. Representatives are encouraged to carefully read the contracts before advising their clients.
Tip Sheet on Environmental Risks - Pollution
For agents and brokers
- How to assess pollution risks
- Understanding available coverage
- Preventing, managing and reducing risks
For claims adjusters
- Taking charge of the file as quickly as possible
- Informing all parties concerned
- Investigating the loss, estimating damages and negotiating a settlement
- Notes in the files