Definition of Pollution Insurance

Pollution insurance is a type of insurance coverage that companies can buy in order to protect themselves against the liability that comes with polluting the environment. While this type of insurance was previously only reserved for large companies like oil and waste companies, more companies have access to this type of insurance coverage now.


The purpose of this type of insurance policy is to mitigate the risk that comes with accidentally polluting the environment. If a company is found guilty of polluting the environment in some capacity, they could be faced with large costs. With this type of policy, if something like this occurs, the insurance provider will step in and help pay for the vast majority of the bills on behalf of the company.

Environmental Cleanup

One of the coverages that is provided with pollution insurance is environmental cleanup. When a company pollutes the environment, they could potentially be faced with large bills to help clean it up again. For example, when an oil company has a large oil spill, they will be expected to pay for the clean up efforts. When this happens, the insurance company will pay for the majority of the cleanup process.


Another component of pollution insurance is liability coverage. When a company pollutes the environment, they could potentially wrong someone else. For example, during an oil spill, many people and businesses could be negatively affected. The fishing businesses in the area will be negatively impacted as well as businesses along the beach. This type of insurance will kick in and pay for all of the liability issues that are caused because of the accident.

Maximum Amounts

With pollution insurance policies, the insurance company often puts a maximum on the amount of benefit that they will pay. This maximum could be broken down a number of ways. You could see a per-claim maximum or it could have an annual maximum. Some policies even come with a lifetime maximum payout benefit. Once the maximum amount is reached, the insurance company stops paying and the rest of the bill is up to the policyholder.


When getting this type of insurance, it is important to look at the quality of the insurance company that offers it to you. The premiums for this type of insurance can be very expensive and when you are a business that is trying to make ends meet, you do not want to pay for coverage that you cannot afford. When you experience a loss, you want an insurance company that will be around to pay your claim.

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