The Uncovered Risk That Puts Toy Manufacturers in Danger

One of every toy manufacturer’s worst nightmares is the irreparable damage caused to their inventory, machinery, and therefore potential cash flow by a warehouse fire. Even though, in most cases, the majority of a manufacturer’s inventory would be covered by a properly placed property policy, one exposure that would not be covered is any pollution claims as a result of the fire.

During a fire, raw materials and or finished goods in a factory or warehouse could, as they are burning or melting, create a pollution condition that would affect the immediate vicinity. As the average American citizen becomes more aware of how environmental risks impact their everyday lives, and their channels of recourse, the higher the likelihood that toy manufacturers may be faced with a lawsuit. The good news is that environmental insurance is easy to obtain and add on to the coverage for your business. A qualified agent or broker should have access to these products, which are now offered by many leading insurance carriers. It’s important to work with an insurance professional who truly understands your business to help you assess your exposures. 

To illustrate the point of the prevalence of environmental risk, here are some environmental hazards that occur in the normal course of manufacturing operations that would be categorized as pollution by an insurance company, and therefore excluded from most standard property policies:

• Release of hazardous chemicals or solvents
• Disposal of waste product in landfills and other disposal sites
• Release of chemicals or fuels from storage tanks
• Gradual pollution of soil or groundwater from manufacturing processes

The term “pollution” can cover many of the everyday materials toy manufacturers take for granted as being benign incidents covered under a General Liability and/or Property Policy.

“Pollution claims are extremely complicated and carry a huge price tag,” said Benjamin Thrush, Vice President of Business Development at HUB International Northeast. “More often than not, toy manufacturers are unaware that they are completely uninsured against pollution related losses and are automatically at risk unless they buy environmental insurance.”

TIA members who have questions about their environmental exposures, or who would like a free analysis of their current insurance policies, may contact Mr. Thrush at 1-800-706-3023. Additional information on HUB Northeast’s business insurance offerings to the toy industry is available online at www.hub-tia.com.