Chris Bunbury, eS Environmental Risk Managers, Inc. Email: jcbunbury@aol

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

2. ENVIRONMENTAL RISK MANAGEMENT AND INSURANCE STRATEGIES FOR AGRICULTURAL OPERATIONS

3. EVERY AGRICULTURAL BUSINESS IS IMPACTED BY ENVIRONMENTAL EXPOSURES

4. What is a pollutant? • A material, substance, product…. introduced to an environment for other than its intended use / purpose. • Fresh water • Cheese

5. Environmental Liability Exposures 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%

6. Environmental Liability Exposures Impacting Agricultural Operations

7. 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

8. Potential Environmental Exposures Impacting Agricultural Operations • Faulty refrigeration units • Natural resource damage • Vapor intrusion • Waste lagoons • Vandalism....

9. Environmental Liability Insurance Coverage Overview For Agricultural Operations Do not offer or purchase limited pollution policies

10. 98% of US businesses are “small business” that can’t afford to self insure their environmental exposures

11. 3 Main Benefits of Environmental Liability Insurance • Defense costs • Claim management • Third party liability (property damage, bodily injury, • and business interruption)‏

12. 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

13. 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

14. 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

15. 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

16. 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?

17. Who are you doing business with? Vendors can create environmental liabilities for you. Do they have the financial assurance to protect you?

18. 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...

19. Professional Liability (E&O)‏ • E&O coverage for environmental engineers/consultants conducting: • Environmental Site assessments • Testing waste water and soil • air emissions...

20. 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.

21. 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.

22. 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.

23. 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.

24. 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.

25. 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.

26. 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.

27. 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

28. Thank you for your time. To drive your environmental insurance sales contact: Parker Bunbury @ parkerbunbury@gmail.com Phone: 231-218-1118 Chris Bunbury @ jcbunbury@aol.com Phone: 231-256-2122 www.EnvironmentalRiskManagers.com