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Business Protection Bulletin

Environmental Liability and the Start-up Company

By December 12, 2016No Comments

th369Why should every start-up company consider environmental liability coverage?

The harmless products and processes of the past have emerged as dangerous long-term pathogens of the present many times – lead-based paint, asbestos, even cigarettes.

Start-ups begin with a new idea, product or service which cannot, by the nature of business, be thoroughly time-tested. As an entrepreneur, you must decide, with sparse data, to go forward.

Unfortunately, injured parties have the advantage of hindsight and long-term studies.

The period of uncertainty after new launches creates a long-term liability for environmental liability as well as products liability. Think about:

1. What are the byproducts?
2. What is our waste stream?
3. Can our components be recycled?
4. What will be the result of employee exposures?
5. Are there any known potential issues.

Review the history of products liability. Caveat emptor morphed into warning labels which soon became punch lines. “Do not use your lawn mower as a hedge trimmer” or “Do not dive into two feet of water” seem like unnecessary warnings, but the legal cases were lost and money changed hands.

Environmental liability is likely to evolve along this same pathway.

The late seventies brought government interventions like EPA and an environmental Cabinet Post. Since then, public consciousness has risen dramatically and sensitivity towards environmental issues has grown.

Unfortunately for business owners, even the most green-minded, environmental impacts are still not well defined and responsibility not settled.

Unable to reduce or modify the environmental risk, the best solution is transferring the risk by insuring it.

No matter how benign you believe your company’s product, process or service to be, you cannot adequately predict the environmental issues twenty years in the future. Certainly asbestos, a natural mineral, was considered safe by its promoters.

Look into environmental liability insurance for your start-up, or your mature company.