Chris Bunbury, eSEnvironmental Risk Managers, Inc.Email: jcbunbury@aol.comPhone: (231) 256-2122Fax: (231) 256-2123PO Box 1127Leland, MI 49654www.EnvironmentalRiskManagers.com

WELCOME

ENVIRONMENTAL RISK MANAGEMENT AND

INSURANCE STRATEGIES FOR AGRICULTURAL OPERATIONS

EVERY AGRICULTURAL

BUSINESS IS IMPACTED BY

ENVIRONMENTAL EXPOSURES

What is a pollutant?

A material, substance, product…. introduced to an environment for other than its intended use / purpose.

Fresh water

Cheese

If an agricultural operation waits until an environmental

problem occurs and any governmental body

gets involved, the cost to address the environmental problem will increase on an

average of 35% to 50%

Environmental Liability Exposures

Environmental Liability Exposures

Impacting Agricultural Operations

Potential Environmental Exposures Impacting Agricultural Operations

• Storage, use and disposal of fertilizers, pesticides, herbicides and animal waste

• Releases from above ground or underground

storage tanks

• Storm water runoff

• Spills from loading and unloading of farm

equipment

and supplies

• Air emissions from chemical applications and

animal waste

Potential Environmental Exposures Impacting Agricultural Operations

• Faulty refrigeration units

• Natural resource damage

• Vapor intrusion

• Waste lagoons

• Vandalism....

Environmental Liability Insurance Coverage

OverviewFor Agricultural Operations

Do not offer or purchase limited pollution policies

98% of US businesses are “small business”that can’t afford to self insure their environmental exposures

3 Main Benefits of Environmental Liability

Insurance• Defense costs• Claim management• Third party liability (property damage, bodily injury,

and business interruption)

Face value of an environmental insurance policy costs the insured tenths of a cent on the dollar, or the insured can wait until a loss occurs and pay 100 cents on the dollar out of their own pocket

Environmental Impairment Liability (EIL)

• Also referred to as Pollution Legal Liability (PLL)• Site Specific Coverage for new and/or pre-existing unknown environmental conditions

• First party on site cleanup• On site and off site third party bodily injury, property damage and business interruption

• First and/or third party auto pollution liability• Off site disposal coverage• Under ground storage tanks

Property Transfer Coverage• Protects the buyer and/or seller should an environmental condition be found that was not caused by the new purchaser of the property

• Supports the value of the property

• Fills in gaps with environmental due

diligence

• Allows you to negotiate a more favorable

loan package

Transportation Pollution Liability (TPL)

• Not the MCS 90 endorsement• Broadened auto pollution liability form CA

9948• Covers during the loading / unloading and

transportation of the cargo• 800,000 tons per day of hazardous

materials are

shipped in the United States• How do you purchase your raw materials FOB

point of shipment / delivery

Underground and Above Ground Storage Tanks (UST

or AST)

• Protects for releases from underground

tank systems

• Does not replace tanks or equipment

•Natural resource damages covered?

Vendors can create environmental liabilities for you. Do they have the financial assurance to protect

you?

Who are you doing business with?

Contractor Pollution Liability (CPL)

• Protects the insured while operating away from any premises they own, rent, lease or occupy, should they cause or exacerbate an environmental liability.

• Chemical applications

• Construction Services

• Equipment maintenance

• Waste management

• Harvesting...

Professional Liability (E&O)

• E&O coverage for environmental engineers/consultants conducting:

• Environmental Site assessments

• Testing waste water and soil

• air emissions...

During an unusually heavy rainstorm, the wall of a farms on site lagoon used to treat pig waste collapsed. More than 150,000 gallons of fecal waste flowed offsite, onto neighboring properties and into a river. Waste cleanup costs exceeded $350,000, while third party damage claims exceeded $75,000.

A property owner had his drinking water well tested prior to selling his land. Testing revealed that the well contained an alarmingly high concentration of total petroleum hydrocarbons. The source of the contamination were several dozen drums of waste oil and maintenance fluids buried on a neighboring farm. Though the drums were buried by the previous farm owner, the current owner was nevertheless responsible for disposal of the drums, soil, groundwater cleanup, bodily injury, and property damage claims which exceeded $1,000,000 and caused the farmers bankruptcy.

A slaughterhouse disposed of all of its waste down a floor drain. Over time the floor drain eroded and cracked allowing the waste to flow into a nearby stream. A fish kill occurred as a result of high biological oxygen demand in the stream. Under the Clean Water Act (CWA), a local environmental group filed a suit for loss of the stream. The slaughterhouse spent $750,000 remediating the problem.

A dairy farmer was using treated waste water as a fertilizer in a land application process. Improper testing of the waste water by a third party lab did not detect heavy metals and excessive e-coli. After several months of application testing revealed excessive amounts of heavy metals and e-coli in the soil. The farmer had to pay remediation costs in excess of $265,000.

Over a period of several years storm water from a chicken processing plant entered a nearby stream and lake. Due to excessive algae and bacteria in the lake, nearby residents and businesses filed claims for property damage, loss of enjoyment and perceived bodily injury. The chicken processing plant was found liable and had to spend $2,000,000 resolving the environmental damage and controlling their storm water.

Authorities evacuated a small farming town after a noxious cloud drifted in from a 30,000 gallon tank leaking anhydrous ammonia which is used as fertilizer. Police said the open valve on the tank made them suspicious somebody might have tried to steal some fertilizer and left the valve open. Anhydrous Ammonia can also be used to make the drug methamphetamine.

Phase I and Phase II environmental assessments involve limited sampling and cannot guarantee that a property is clean. For example, a real estate limited partnership acquired property previously used for farming on which they planned to build a mall. When excavation for the mall began 100 drums of buried pesticides and herbicides were unearthed. The chemicals contaminated the soil and remediation and disposal costs exceeded $750,000.

Conclusion

• Environmental exposures impact every

agricultural operation• Sustainability begins with risk management• Most agricultural operations can’t afford to

self insure their potential environmental

liabilities• Who are agricultural operations doing

business with that can cause them to

experience an environmental loss

To drive your environmental insurance sales contact:

Parker Bunbury @ parkerbunbury@gmail.comPhone: 231-218-1118

Chris Bunbury @ jcbunbury@aol.comPhone: 231-256-2122

www.EnvironmentalRiskManagers.com

Thank you for your time.