Property Types

Equipment Dealers

Farm and heavy equipment dealers may face numerous environmental exposures due to their operations and materials used and stored on-site. Often these facilities perform repairs in addition to selling machinery. Petroleum products and waste fluids may be stored in tanks, drums, containers, or in equipment stored at dealer locations, and can leak or spill. Facilities performing repair and maintenance work may have in-ground hydraulic lifts, which can also leak. If not properly controlled and managed, wash water from washing down equipment and stormwater coming into contact with maintenance and storage areas can carry pollutants to storm drains. Wastes generated at equipment dealers and disposed at non-owned disposal facilities may result in tort liability. Additionally, dealer and repair facilities can experience moisture intrusion into building materials that can lead to mold growth. Equipment dealers may also perform servicing or repairs of equipment at customers’ properties, resulting in environmental liability for these off-site operations.

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Environmental Exposures May Include:

Fluid Releases
Fuel and Chemical Storage
Paints
Hydraulic System Leakage
Stormwater Run-off
Oil Water Separators
Equipment Wash Water
Flammables
Batteries
Waste Management
Loading and Transit Releases
Off-Site Maintenance Releases
Water Intrusion and Mold

Fluid Releases

Fluids, such as motor oil, hydraulic fluid, engine coolant, gasoline, or diesel fuel, can leak from stored equipment or be accidentally released or spilled from drums or other containers during repair or maintenance. Releases can enter floor drains, flow onto unpaved areas, or collect in stormwater run-off, leading to soil, groundwater, or surface water contamination or impacting nearby third-party properties. Drinking water sources or natural resources could also be impacted.

Fuel and Chemical Storage

Fuels, maintenance chemicals, or waste fluids may be stored in aboveground or underground storage tanks. Improper management or monitoring of tanks can lead to leaks or spills into the environment. Tank pipes or valves can also rupture or leak and impact the environment. Furthermore, spills can occur due to overfilling of tanks or during loading or unloading.

Paints

Equipment dealers may perform painting operations and generate paint and associated solvent wastes. If not properly managed, paints or solvents could be released, migrating to floor drains, storm drains, soil, or groundwater. Paint spray operations generate toxic vapors, which, if not controlled, could lead to air emissions violations or third-party bodily injury or property damage claims.

Hydraulic System Leakage

Hydraulic lifts may be present and can be either below or aboveground. Releases of hydraulic fluid below ground can go undiscovered for long periods and impact soil or groundwater. Releases or leaks from aboveground lifts can enter floor or storm drains or migrate to unpaved facility areas.

Stormwater Run-off

Outdoor storage and maintenance areas can come in contact with stormwater. Stormwater run-off can collect pollutants; if not properly controlled, the contaminated run-off can discharge into sanitary or storm drainage systems. It can pollute soil, groundwater, or surface waters, impacting human health and natural resources.

Oil Water Separators

Oil water separators may be present at an equipment dealer facility. They receive oily wastewater, and if not properly maintained, it can leak or overflow, impacting soil or groundwater or discharging oils to sewer systems or surface water bodies.

Equipment Wash Water

Some equipment dealers may have washing facilities. Wash water from cleaning equipment may have high levels of oil, grease, suspended solids, heavy metals, degreasing solvents, or detergents. Wash water needs to be properly contained and disposed of off-site or treated before discharge to prevent pollutants from being discharged to storm drains or sanitary sewers at unacceptable levels.

Flammables

Some products stored at equipment dealer facilities may be flammable, such as paint thinners, strippers, waste paint, solvents, and saturated shop rags. A fire could emit toxic fumes and smoke from the burning materials or a mix of materials due to the fire. Tires stored on-site are a particular concern in a fire due to the toxic materials in tires, the production of significant smoke when burning, and the difficulty of extinguishing tires on fire. Firefighting solutions, such as water and foam, could create contaminated run-off that impacts soil or groundwater on or off-site or migrates to surface waters.

Batteries

New and used batteries may be stored at an equipment dealer’s property. Damaged batteries could release sulfuric acid and lead, contaminating soil or groundwater or entering floor or storm drains, impacting sewer systems or surface waters.

Waste Management

Repair and maintenance facilities for equipment generate and dispose of waste, such as used oil, maintenance fluids, lead-acid batteries, sludge and oil from oilwater separators, waste paints, solvents, oil-contaminated rags, and absorbents. Waste generators must determine if their wastes are hazardous and require special disposal or recycling procedures. Improper characterization and disposal can result in environmental liability. Waste generators retain “cradle to grave” liability for their disposed of wastes and can become Potentially Responsible Parties for cleanups at non-owned disposal sites (NODs).

Loading and Transit Releases

Transport of waste materials by the owner or third-party carriers to NODs or recycling facilities or transport of materials used for equipment maintenance at customer sites can lead to environmental liability for spills or leaks during transit or while loading or unloading.

Off-Site Maintenance Releases

During repair or maintenance of equipment performed at customers’ properties, spills or leaks of maintenance chemicals, waste oils, or other fluids may occur. These releases could impact soil or groundwater, or pollutants could migrate in stormwater to surface water bodies, leading to cleanup, third-party bodily injury or property damage, or natural resource damage claims.

Water Intrusion and Mold

Water intrusion may occur at an equipment dealer’s facility due to storms, flooding, or leaks from water-containing systems such as washing facility water pipes, fire sprinklers, HVAC, and plumbing. Improper building ventilation can lead to humid conditions in a building. Water intrusion or humid conditions can lead to mold growth in the building structure and environmental liability for cleanup and third-party claims.

Environmental Liability Insurance Can Provide Coverage For

On-site cleanup of new and pre-existing pollution conditions

Off-site cleanup of new and pre-existing pollution conditions

Third-party claims for cleanup costs

Third-party claims for bodily injury and property damage

Both sudden and gradual pollution conditions

Defense of third-party claims

First-party and third-party transportation pollution liability

Business Interruption expenses resulting from pollution conditions

Mold, bacteria, legionella, and more

Natural resource damage

Emergency response expenses

Illicit abandonment

Non-owned disposal sites

Loading and unloading

Civil fines and punitive damages, where allowed by state law

Aboveground and underground storage tanks

Off-site services pollution liability

Claims Scenarios & Examples

During the removal of an underground hydraulic lift from an equipment dealer’s repair shop, soil staining was observed. It was determined that hydraulic fluid from the hydraulic reservoir for the lift had seeped into the ground over time and migrated beyond the perimeter of the repair building. Costs for excavation, transportation, and disposal of petroleum-contaminated soil were significant.
An oil water separator connected to the service shop area of an equipment dealer developed a crack within the underground piping. Over time, oil seeped from the system into the surrounding soil and groundwater and eventually migrated to a neighboring property. The release was discovered when an oil sheen was observed on an adjacent stream, and the source was traced back to the oil water separator. Contaminated soils were excavated, and a groundwater treatment and monitoring program was implemented. The cleanup costs were extensive.
The concrete secondary containment around a 10,000-gallon diesel aboveground storage tank (AST) at an equipment dealer was cracked and worn. The diesel tank failed, allowing 8,000 gallons of fuel to spill into the secondary containment. The diesel fuel migrated through the cracks in the containment structure to the underlying soils. The total cost for investigation, removal, and disposal of the spilled fuel and impacted soils exceeded $320,000.
A maintenance garage that used solvents for parts washing performed the work over a drain leading to an on-site septic system. Over time, contaminants discharged to the septic system leach fields migrated into the surrounding soils and groundwater. Site remediation involved soil removal and installation of a groundwater recovery system. The costs exceeded $720,000.
An equipment dealer generated waste solvents, which it shipped to a solvent recycler for disposal. The solvent recycler’s facility was identified as the source of contamination in a downgradient potable aquifer. As the waste generator, the equipment dealer was designated as a responsible party by environmental regulators and paid $340,000 to settle the claims related to the release.
An equipment dealer was located adjacent to state-owned wetlands. The state discovered that the dealer had placed construction and demolition debris in the wetlands and had violated hazardous waste storage regulations. Improper waste storage resulted in petroleum contamination in site soil and groundwater. The equipment dealer was ordered to remediate contaminated soil and groundwater on his property and remove the construction and demolition debris from the wetlands. The company paid $170,000 in civil penalties and cleanup costs.

Final Consideration

Your business can be faced with the cost to defend itself against allegations or legal action from pollution related events, regardless if you are at fault or not. Having the proper insurance coverage in place will help fund the expenses incurred to investigate or defend against a claim or suit and provide you with environmental claims handling expertise.

This environmental risk overview offers a general understanding of potential risks and may not reflect all risks associated with your business. Environmental Risk Professionals has compiled this overview for informational purposes only. This overview does not constitute legal opinion or advice, nor does it establish a consultant-client relationship. This overview is not intended to guide project parties in interpreting specific contracts or resolving disputes; such decisions may require consultation with counsel and depend on various factors. © 2025 Environmental Risk Professionals, LLC

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