Property Types

Lubricant Manufacturers

Lubricant manufacturers are exposed to numerous environmental risks, ranging from using and storing chemicals used in manufacturing to releases at the facility. They manufacture products such as solid lubricants/grease, synthetic oils, mineral oil, hydraulic fluid, aqueous lubricants, sanitizers, and bio-lubricants, that if accidentally spilled or released at the facility, could result in environmental cleanup and third-party liability. Accidental discharges of pollutants into on-site drains and drywells could enter and contaminate water sources, including drinking water, and harm natural resources. Lubricant manufacturers create products that have the potential to emit hazardous fumes that contaminate the air, such as naphthenic and aromatic hydrocarbons. Manufacturers may also face environmental exposures through releases from above and underground storage tanks located at their facilities, containment breaches, improper storage or mixing of incompatible materials, and waste disposal.

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Environmental Exposures May Include

Stormwater Run-off
Accidental Releases During Transport
Wastewater
Loading and Unloading
Storage Tanks
Hazardous Waste Management
Illicit Abandonment
Mold
Neighboring Contamination and Migration
Flammables

Stormwater Run-off

Stormwater run-off from manufacturing facilities could come in contact with chemicals, debris, waste, and other outside storage, contaminating soil, groundwater, and natural resources such as rivers, lakes, and streams and harming aquatic life.

Accidental Releases During Transport

Accidental releases during the transportation of raw materials, products, and waste from a manufacturing facility during vehicle accidents can enter the groundwater and contaminate drinking water sources. Leaks from the tank or containment system holding the material during transit could result in pollutants entering the roadway and contamination being released to nearby storm drains.

Wastewater

Washing down equipment, maintenance, storage, and repair areas could discharge pollutants into storm drains. Wastewater generated from these activities must be properly contained, collected, and disposed of. Exposures may include unintended air emissions from the manufacturing process, such as releasing naphthenic and aromatic hydrocarbons. There may also be unintended air emissions from the exhaust or toxic gases released by malfunctioning equipment. Vehicles and powered equipment, such as forklifts, trucks, and cranes, may be used at the manufacturing facility. These types of internal combustion vehicles are powered by diesel or propane, which can emit carbon monoxide gas.

Loading and Unloading

Heavy-duty trucks loading and unloading at manufacturing facilities can leak automotive fluids on the property. Pollutants such as heavy metals, solvents, fuels, hydraulic fluids, oil, and grease can leach into the soil, contaminate groundwater, or be collected by rainfall, creating contaminated stormwater that can pollute storm drains and adjacent sites.

Storage Tanks

Releases of chemicals or petroleum-related products from aboveground or underground storage tanks or the related piping, along with vessels used for heating the base fluid, fractionating towers, sedimentation tanks, and filtering systems, could enter storm drains and damage the local sanitary sewer or municipal or private drinking water systems in the areas surrounding the manufacturing facility.

Hazardous Waste Management

Lubricant manufacturers may generate hazardous wastes requiring special disposal procedures, such as used oil and oil filters, lead-acid batteries, and equipment containing mercury (thermostats). Improper waste disposal could lead to environmental liability or legal consequences for violating regulatory requirements. Generators who send their wastes to non-owned disposal sites could be held responsible for future environmental conditions from that site. Releases of contaminants from non-owned disposal facilities can contaminate soil, groundwater, and surface water and cause damage to third-party property located adjacent to the disposal facility.

Illicit Abandonment

Illicit abandonment is the illegal dumping of pollutants on a property. It can become 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

Mold could develop from moisture intrusion due to storms and flooding from leaking water pipes, sprinklers, and HVAC systems. Many manufacturing 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 areas within the building.

Neighboring Contamination and Migration

Many manufacturing facilities are located in commercial and industrial areas within a city. Contaminants from neighboring facilities could migrate to the manufacturer’s property. If the neighboring business owner is not properly insured or goes bankrupt, the cost of cleanup could fall on the manufacturer for their property.

Flammables

Some products at a lubricant manufacturing facility are flammable and may result in a fire that spreads and releases other contained materials. A hostile fire at the facility could emit toxic fumes and smoke from the materials stored at the site or due to a mix of materials resulting from the fire. Firefighting solutions such as water or foam could create contaminated run-off that spreads to nearby storm drains or properties, resulting in environmental cleanup and tort liability.

Environmental Pollution Liability 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 bodily injury and property damage

Third-party claims for cleanup

Defense of third-party claims

Both sudden and gradual pollution conditions

Products pollution liability

First and third-party  transportation pollution liability

Loading and unloading

Mold, bacteria, legionella, and more

Natural resource damage

Emergency response costs

Above and underground storage tanks

Non-owned disposal sites (NODS)  

Civil fines and penalties

Illicit abandonment

Business interruption resulting from pollution conditions

Crisis/reputation management

Claims Scenarios & Examples

While excavating the area for a production line expansion project, a manufacturer found oily soil that smelled of petroleum. They investigated it more extensively and found an old and undocumented sludge drying pit the prior owner had used in the 1940s. The manufacturer had to cover the expenses to remove and remediate the soil. Total costs were more than $400,000.
A manufacturing facility maintained a series of aboveground storage tanks. A leak in one of the tanks caused a hydrochloric acid vapor cloud to be released. Residents in the area, including a trailer park, had to be evacuated, and several of them had to get medical treatment for alleged respiratory injuries, for which they sought damages.
An unknown party illegally placed a container of hazardous liquid waste into a dumpster at a small manufacturing facility. The hazardous waste container leaked and contaminated the entire contents of the dumpster. The dumpster then leaked onto the floor of the manufacturing plant and came in contact with other materials causing everything to be considered hazardous waste. Cleanup costs and legal fees exceeded $150,000.
A plant manufactured grease, lubricating oil, and fluids, and for their operations, more than 4 million gallons of crude oil and 100,000 gallons of petroleum products were stored on their site. A large fire occurred at the facility, resulting in explosions, a large black cloud of smoke, and the evacuation of surrounding neighborhoods. Several parties sued the manufacturer, alleging air and water pollution, unauthorized waste disposal, and costs to respond to the incident. The smoke and water run-off from the fire contained unknown contaminants released into the environment and brought concern. Further investigation was done to evaluate the extent of the contamination and ensure the damage was remediated.
A lubricant manufacturing company regularly washed drums over a severely compromised concrete containment pad. Over time, wash water laced with solvents slowly seeped through concrete cracks and dripped into subsurface soils and groundwater. The plume migrated off-site into a nearby municipal water supply well. The municipality sued the company for cleanup and property damages. The municipality also required costly remedial technology to provide safe drinking water to customers.

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 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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