Automobile Dealerships

Improper management and monitoring of aboveground and underground storage tanks can lead to spills and releases to the environment that may contaminate the soil and groundwater at the dealership. Underground storage tanks may leak over time, and aboveground tanks have the potential to have leaks from tank bottoms, pipes, or valves, ruptures causing a catastrophic release of tank contents, and spills during the loading or unloading process. The contaminants may migrate off-site damaging sewer systems by entering drywells and storm drains or contaminating the soils and groundwater on neighboring properties.

Many automobile dealerships store new car and truck tires in their parts departments, service repair shops, and warehouses. They also store used tires before being removed from the site and hauled to a permitted landfill, automotive tire recycler, or other approved location. In the meantime, before the tires are sold or removed from the dealership, they present an ongoing fire hazard. Fire can cause the release of toxic fumes that could adversely affect third parties at the facility and residents in surrounding neighborhoods, leading to third-party claims for bodily injury and property damage against the dealership’s owner. In addition, cleanup from waste tire transporters who improperly dispose of used tires in an unpermitted disposal facility may be the responsibility of the dealership owner.

Illicit abandonment is the illegal dumping of pollutants on a property. It becomes the property owner’s burden for cleanup and third-party bodily injury or property damage if law enforcement cannot locate the originator of the waste.

Mold could develop from moisture intrusion due to storms, flooding, or leaking water pipes, sprinklers, and HVAC systems. Many buildings are flat-roofed, where pooled water can be absorbed by the roofing material and seep into sub-roof areas. Mold can also develop within HVAC systems (air handling units, coils, and ductwork) or from improper building ventilation or humidity management of climate-controlled storage.

Many automobile dealerships operate auto body shops at their sites, including repairing and painting damaged cars and trucks. Storage of painting supplies must be organized and managed to prevent the release of paint or painting supplies. Spilled paint could enter storm drains or drywells and migrate off-site contaminating sewer systems. Spilled paint could also reach groundwater and damage local drinking water systems. Paint spray operations generate toxic vapors that could be released into the environment and cause air pollution violations.

Existing soil or groundwater contamination may be present at the property, creating environmental liability for the owner or occupant, who may be held responsible for addressing the cleanup or remediation of the property. Dealerships may often be located in industrial areas or near other automotive facilities and can also be susceptible to pollution migrating from these facilities onto the insured’s site. If the third party does not have the funds or insurance to perform cleanup, the responsibility can fall on the insured to clean up their site.

Some products are flammable and may result in a fire that spreads and damages automobiles parked at the dealership, releasing potentially hazardous toxins into the air. A fire in the buildings located on a site, such as the service center or parts warehouse, could emit toxic fumes and smoke from the materials stored in the buildings or due to a mix of materials that occurs due to the fire. Fire-fighting solutions such as water and foam could create contaminated run-off that spreads to nearby storm drains or properties, resulting in environmental cleanup and tort liability.

Auto Dealerships may generate hazardous wastes that require special disposal procedures. Spent solvents, waste oil, antifreeze, wastewater, and other materials such as automobile batteries and paints may all fall under hazardous waste. The waste generator is responsible for determining whether it is hazardous and following proper storage, labeling, and disposal procedures. Improper disposal or recycling could lead to cleanup and third-party liability, and there may be legal consequences for violating RCRA hazardous waste requirements.

Wash water from cleaning vehicles and service bays may have high levels of oil, grease, suspended solids, and heavy metals, as well as cleaning chemicals, degreasing solvents, and detergents. Run-off from washing areas creates the potential for pollutants to enter trench drains and, eventually, the public storm system, which can contaminate water sources and cause natural resource damage.