ERP - Environmental Risk Professionals

Cargo Transportation Spills & Vehicular Overturn Releases

Releases of hazardous or non-hazardous cargo can occur due to improper cargo securement, a loose valve, vandalism, or an accident involving a truck in transit, such as a rollover or upset on a highway or roadway. Releases of transported materials can contaminate soil or groundwater, which could trigger third-party claims for cleanup, property damage, or injuries to individuals. A release could contaminate drinking water sources or natural resources by entering surface waters, such as lakes, rivers, streams, or creeks. Additionally, hazardous fumes can be released, depending on the cargo, that could injure third parties.

Cargo Misdelivery & Wrongful Tank Transfer

Operations moving contents from one container into another (chemicals, liquid asphalt, heating/fuel oil, cement, etc.) are exposed to misdelivery/wrongful delivery into the wrong receptacle, even to the wrong address. Delivering any product or waste to the wrong receptacle could result in liability for cleanup, third-party bodily injury, or property damage.

Inadequate Cargo Containment & Fugitive Fiber Release

Asbestos-containing materials, contaminated soils, lead-based paint, or other dry materials could become disturbed during transportation due to inadequate containment in a vehicle or upsets, overturns, or other accidents. Releases of hazardous dust or asbestos fibers could occur and expose third parties to serious injury or illness.

CERCLA Transporter & Superfund Site Liability

Transporters may incur potential liability for the cleanup at abandoned or uncontrolled sites. Under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), a transporter can be classified as a potentially responsible party for a release at a Site where they transported hazardous substances.

Temporary Staging & Waste Storage Yard Releases

Contractors may be required to transport and store wastes or materials at their owned site or temporary storage facilities, pending final disposal. Releases during the temporary storage of wastes or materials could lead to soil, groundwater, or surface water contamination, resulting in costly cleanup.

Used Oil Transportation & Regulatory Classification

Used oil may be considered hazardous waste or non-hazardous waste depending on the chlorine content and is considered hazardous waste hauling in some states, regardless of the chlorine content. Transporters must be aware of the requirements for the states in which they are transporting used oil. Improper segregation, labeling, and disposal of hazardous materials can result in environmental liability.

CA 9948 Auto Endorsement Coverage Limitations

MCS-90 Endorsement Recoupment & Financial Assurance Risks

Some transporters rely on the MCS-90 endorsement for pollution coverage. Although this endorsement may satisfy the Motor Carrier Act, it is not “true insurance.” MCS-90 is a financial assurance mechanism ensuring spills are cleaned up. The endorsement is an indemnity agreement similar to a surety bond whereby the insurer will recoup their loss from the fleet owner. MCS-90 does not specifically provide environmental pollution liability coverage and leaves the fleet owner responsible for any costs incurred for spill cleanup.

Loading & Unloading Transfer Spills

Improper handling of materials during loading and unloading onto or from a vehicle may result in releases at either jobsites or storage locations. The coverage afforded by MCS-90 and CA-9948 endorsements for loading and unloading activities is vague and may not be covered. In contrast, Transportation Pollution Liability policies typically cover the cleanup of spills during loading and unloading.

Transportation Pollution Liability Coverage Options Can Include

First-party transportation pollution liability

Third-party transportation pollution liability

Third-party claims for cleanup

Third-party claims for property damage

Third-party claims for bodily injury

Defense of third-party claims

Loading and unloading

Civil fines and penalties, where allowed by law

First-party emergency response costs

Natural resource damage

Claims Scenarios & Examples

A truck spilled a three-mile trail of a pesticide through a farming community, creating fumes that sent at least eleven people to the hospital and forced the evacuation of a trailer park. Bodily injury suits were filed against the owner of the truck.

A dump truck operator hauling a load of dirt and rocks failed to negotiate a turn in the road. The load shifted, causing the truck to overturn and land on its side. As a result, a discharge of cargo occurred. The contents spilled down the steep embankment and into the stream below. The auto and general liability insurers denied the cleanup claim based on the pollution exclusion, citing the Federal Clean Water Act. The Act broadened the definition of “pollutants” beyond that of manufactured toxic chemicals or hazardous wastes. The environmental liability was not covered because of the pollution exclusion in the dump truck driver’s CGL insurance policy. The resulting out-of-pocket costs for full environmental restoration of the embankment and stream devastated the contractor’s balance sheet.

A tanker truck filled with edible-flavored syrups was involved in an accident. The tank cracked, and the liquid leaked into a nearby reservoir, killing much of the fish and plant population. The municipality filed a pollution claim stating the company was responsible for cleaning up the water and restoring the fish and plant life to a suitable level. The company reported the claim to their insurance agent, seeking coverage under their auto policy. The agent informed them the auto policy did not offer such coverage, so they turned to the General Liability policy only to learn it also offered no coverage for pollution incidents. The syrup company had to pay roughly $3,000,000 to remediate the contaminated area and satisfy the local authorities.

A waste hauler hired by a service station to carry used motor oil overturned and spilled its cargo into a stream. The spill was reported to the state environmental agency, and an emergency response team cleaned the road. The waste hauler incurred costs for investigating the impacts on soil and water, remediation, and monitoring costs. Remediation efforts were significant, and the total cost was $700,000.

A Highway Patrol trooper closed a rest area for most of the day while hazardous materials crews worked to clean up a truck trailer leaking nitric acid. Hazardous material workers put a portable pool under the truck to catch the leaking acid until the load could be transferred to another truck. The chemical appeared to have leaked from around a faulty gasket on the truck. The transporter was liable for the cleanup expenses and business interruption claims from the businesses at the rest stop.

Over five years, the Environmental Protection Agency (EPA) received 33 reports of large milk spills or discharges involving dairies, dairy farms, or trucking companies. Once the milk reaches waterways, it interacts with bacteria so that water is depleted of oxygen. Once milk reaches waterways, microorganisms use it as a food source, leading bacteria to grow at an explosive rate. This bacterial bloom consumes nearly all the oxygen in the water, suffocating fish and other aquatic life. For example, 700 gallons of milk were dumped down a drain on a farm, killing 3,800 fish in a nearby stream. In situations of quantity and damage to natural resources, a milk spill is often treated similarly to an oil spill and is considered a pollutant.

About 900 claims were filed by motorists who suffered damage to their vehicles after a truck trailer spilled thousands of gallons of liquid asphalt along 40 miles of a turnpike. The value of the claims filed exceeded $1.7 million. With the transportation company’s pollution policy having a $1 million limit, the company faced close to a three-quarter million loss.

Insurance Products

Transportation Pollution Liability

Environmental Exposures May Include