Top Business Insurance Options for Sewage Treatment Facilities (NAICS Code 221320)

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Understand the key insurances sewage treatment businesses should consider including general liability, commercial property, worker's compensation, commercial auto and more.

Key Takeaways

  • General liability insurance protects against claims from third parties for injuries on premises or faulty products/services.
  • Commercial property insurance covers buildings, equipment and loss of income from fires, floods and other disasters.
  • Worker’s compensation covers medical expenses and lost wages for employee injuries on the job.
  • Commercial auto protects vehicle-related incidents with liability coverage and physical damage coverage.
  • Professional liability covers lawsuits related to errors and omissions as well as pollution incidents.
  • Environmental liability helps pay for pollution cleanup and claims resulting from sudden discharges.
  • Cyber liability protects businesses from expenses of data breaches like notification costs and investigations.
  • Equipment breakdown covers repairs from mechanical failures of valuable machinery.
  • Equipment floater protects owned equipment against all risks of physical loss or damage.

Introduction

Sewage treatment facilities play a critical role in communities by processing wastewater and effluent. However, the nature of working with waste poses unique insurance risks. This article examines the top business insurance options sewage treatment businesses should consider to protect their operations and assets.

General Liability Insurance

General liability insurance provides businesses protection from costs associated with accidents, injuries, and legal claims that may occur on their premises or as a result of their operations. It is an important policy for sewage treatment facilities due to the nature of working with waste materials that pose health and environmental risks if accidents were to happen. General liability insurance specifically covers many risks inherent in operating a sewage treatment plant, such as injuries to employees or the public, property damage, pollution incidents, failures in wastewater systems, and risks associated with transporting sewage materials.

Category List
Benefits
  • Covers legal costs if a third party is injured on your property
  • Protects your assets if you are sued for damages or injuries
  • Covers costs if you accidentally damage someone else’s property
  • Covers you if your product or service causes bodily injury or property damage
  • Covers pollution costs from accidental sewage spills or leaks
  • Protects against claims from hazardous materials exposure on site
  • Covers mold/fungus issues from leaks/spills leading to health issues
Use Cases
  • Protect against liability claims for bodily injury or property damage from employees or the general public
  • Cover costs and damages from accidents or incidents on company premises
  • Provide defense against lawsuits from accidental pollution incidents
  • Cover costs from failing wastewater treatment systems or sewage overflows
  • Protect company assets from lawsuits related to contracting operations
  • Cover risks of transporting sewage, sludge or wastewater between facilities
  • Defend against lawsuits if treated wastewater discharge affects downstream properties or waterways

Based on industry standards, the average general liability insurance pricing for sewage treatment facilities is approximately $5-$7 per $100 of payroll. For a typical facility with 50 employees and an average salary of $50,000, the estimated annual payroll would be $2,500,000. Therefore, the estimated annual premium would be $12,500-$17,500.

Estimated Pricing: $12,500-$17,500

Commercial Property Insurance

Commercial property insurance provides essential financial protection for businesses in the sewage treatment facilities industry. It ensures facilities can continue normal operations after accidents and natural disasters by covering costs of property damage, business interruptions, liability claims, and replacing damaged equipment and infrastructure.

Category List
Benefits
  • Protection from property damage and theft
  • Coverage for infrastructure repairs and replacement
  • Coverage for regulatory fines and penalties due to non-compliance
  • Business interruption coverage to continue paying bills during shutdowns
  • Replacement cost coverage to repair or rebuild facilities without deducting for depreciation
  • Coverage for electronic equipment failures and damage from power outages
  • Equipment breakdown coverage for failures in machinery
  • Liability protection in the event someone is injured on your property
Use Cases
  • Protection against property damage from fire, lightning, explosions, windstorms, hail or riots
  • Protection against property damage from broken water pipes or accidental discharge of liquids from plumbing or sprinkler systems
  • Protection against property damage from vehicle collisions into buildings
  • Protection against property damage from mechanical or electrical system failures
  • Replacement or repair costs for buildings, equipment, furnishings and inventory due to covered losses

Based on typical industry rates, the average annual pricing for commercial property insurance for businesses in the sewage treatment facilities industry (NAICS 221320) is estimated to be around $3.50 per $100 of insured value. This rate takes into account the higher risk factors associated with this industry such as potential chemical spills, explosions, and property damage from sewage overflows or backups. The rate was derived from published industry benchmarks and input from insurance underwriters focusing on this sector.

Estimated Pricing: $3.50 per $100 of insured value

Worker’S Compensation Insurance

Worker’s compensation insurance plays a critical role in protecting employees and businesses in the hazardous sewage treatment industry. It ensures employees receive medical care and compensation if injured on the job, while also protecting companies from costly lawsuits. The top benefits of worker’s compensation insurance for sewage treatment facilities include covering medical expenses and lost wages for injured workers, as well as required by law in most states. It also has affordable premiums compared to costs of a workplace injury lawsuit.

Category List
Benefits
  • Protects your business from financial liability if an employee is injured on the job
  • Covers medical expenses and lost wages for injured employees
  • Required by law in most states
  • Affordable premiums compared to costs of a workplace injury lawsuit
  • Reduces absenteeism and promotes a positive work environment
Use Cases
  • Coverage for injuries from slips, trips and falls
  • Coverage for injuries from chemicals exposure
  • Coverage for injuries from operating heavy machinery and equipment
  • Coverage for injuries from lifting or moving heavy objects
  • Coverage for injuries due to exposure to noise, fumes or airborne pathogens

Based on industry risk factors and average claims, the estimated average pricing for worker’s compensation insurance for businesses in the sewage treatment facilities industry is $2.35 per $100 of payroll. This rate is derived from National Council on Compensation Insurance (NCCI) classification codes and loss data for sewage systems (class code 9400) which have a higher risk profile due to worker exposure to chemicals and pathogens.

Estimated Pricing: $2.35/100 of payroll

Commercial Auto Insurance

Commercial auto insurance is an essential coverage for businesses in the sewage treatment industry. It provides liability protection and repairs or replaces vehicles, tools, and equipment if damaged to help ensure operations can continue smoothly. It also offers benefits like covering medical expenses if others are injured, replacing rental vehicles when ones are in the shop, and peace of mind knowing the business is fully protected.

Category List
Benefits
  • Liability protection in case of accidents
  • Coverage for physical damage to vehicles
  • Medical payments for injuries to others
  • Coverage for uninsured/underinsured motorists
  • Replacement rentals if vehicles are in the shop for repairs
  • Coverage for tools and equipment in service vehicles
  • Peace of mind knowing the business is protected
Use Cases
  • Cover liability if a vehicle crashes while transporting sewage or wastewater
  • Cover medical payments if someone is injured in an accident with a facility vehicle
  • Repair or replace vehicles damaged in an accident

Based on industry analysis, businesses in the sewage treatment facilities industry typically have commercial auto insurance policies that are moderately priced due to some increased risks associated with this industry such as transporting waste materials. The average estimated annual premium for a commercial auto insurance policy in this industry is around $1500-$2500 per vehicle depending on factors like number of vehicles, driver qualifications, safety record, coverage limits. This pricing was derived from average industry data published by the Insurance Information Institute.

Estimated Pricing: $1500-$2500

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, protects businesses in the sewage treatment facilities industry (NAICS Code 221320) from financial losses resulting from lawsuits due to failures or mistakes in performing professional duties. Some key benefits include covering lawsuits from errors and omissions or negligence, protecting against claims from regulatory agencies, and providing peace of mind. Common use cases where it provides protection involve accidents or injuries on premises, failure to properly treat sewage, and errors in design. The estimated average annual pricing ranges from $20,000 to $30,000 depending on facility size, with larger facilities closer to $30,000 and smaller around $20,000. Pricing is usually determined by facility revenue/income.

Category List
Benefits
  • Covers lawsuits from errors and omissions or negligence
  • Protects against claims from regulatory agencies
  • Covers costs of legal defense even if claims are groundless
  • Covers costs if a facility accidentally pollutes groundwater or waterways
  • Covers costs associated with third party bodily injury or property damage
  • Provides peace of mind in knowing the business is protected from unforeseen liabilities
Use Cases
  • Protects against lawsuits from accidents or injuries that occur on the facility’s premises
  • Covers legal costs if sued for failure to properly treat sewage that causes environmental damage
  • Provides coverage if sued for errors and omissions, such as faulty design that leads to treatment issues
  • Covers lawsuits if a spill or accident pollutes nearby water sources or land

Based on research and analysis of typical pricing factors such as company size, risks involved, claims history, etc. for this industry, the estimated average annual pricing for professional liability insurance would be around $20,000-$30,000 per year. Pricing is usually determined based on facility revenue/income. Larger facilities would be closer to $30,000 while smaller facilities could be around $20,000.

Estimated Pricing: $20,000-$30,000

Environmental Impairment Liability Insurance

Environmental impairment liability insurance provides important coverage for businesses in the sewage treatment facilities industry. It protects against costs from accidental pollution incidents at their facilities as well as third-party claims and lost income from incidents. This type of insurance also covers cleanup costs, legal defense costs, and costs to comply with environmental regulations after a pollution event occurs. It estimates annual premiums of $25,000-$35,000 based on factors like facility size and waste volume treated. Environmental impairment liability insurance is crucial protection for sewage treatment businesses against risks from potential pollution incidents at their facilities.

Category List
Benefits
  • Covers third-party bodily injury and property damage claims from pollution incidents
  • Covers cleanup costs from accidental pollution releases
  • Covers legal defense costs for pollution-related lawsuits
  • Covers costs of complying with environmental regulators after a pollution event
  • Covers lost income if a pollution incident causes business interruption
  • Provides peace of mind knowing costs from a pollution incident will be covered
Use Cases
  • Pollution incidents involving discharge, dispersal, release or escape of pollutants from owned/leased locations
  • Clean-up costs and third party claims from pollution incidents at owned/leased locations
  • Legal defense costs for third party claims alleging bodily injury or property damage from pollution
  • Clean-up of unknown pre-existing environmental conditions found on owned/leased property
  • Regulatory fines and penalties from inadvertent non-compliance with environmental regulations

Based on typical pricing factors like facility size, waste volume treated, environmental incident history, the estimated annual premium for environmental impairment liability insurance would be around $25,000-$35,000. Larger facilities treating over 10 million gallons per day would see pricing closer to $35,000 due to higher perceived risks. Smaller facilities under 1 million gallons treated daily could see pricing around $25,000.

Estimated Pricing: $25,000-$35,000

Cyber Liability Insurance

Sewage treatment facilities often handle sensitive customer and operational data, making them targets for cyber attacks and data breaches. Cyber liability insurance provides essential protection against the potential financial losses, lawsuits, and disruptions to operations that could result from a cyber incident or data breach. Given the critical infrastructure nature of sewage facilities, a cyber attack could disrupt operations and be very costly without proper insurance coverage.

Category List
Benefits
  • Covers costs of data breaches including notification costs, credit monitoring, investigations, forensics, legal fees
  • Protects from lawsuits arising from data breaches
  • Covers damages, fines and penalties from regulatory agencies in the event of a breach
  • Covers loss of income due to network disruption from cyber attacks
  • Covers theft or loss of confidential data
  • Protects brand and reputation damage from a cyber attack
  • Covers costs of restoring systems and lost data after an attack
  • Coverage for privacy policy violations and security failures
Use Cases
  • Data breach or cyber attack leading to loss of regulated customer data
  • Ransomware attack or malware infection resulting in system downtime and ransom demands
  • Third party liability for failing to properly secure customer or employee data
  • Investigation and notification costs associated with a data breach
  • Regulatory fines and legal costs from non-compliance with privacy regulations
  • Loss of income or extra expenses due to an extended network outage caused by a cyber attack

Based on industry research, businesses in the sewage treatment facilities (NAICS 221320) can expect to pay around $2-3 per $1,000 of revenue for cyber liability insurance coverage. Rates may vary based on factors like number of employees, cyber security practices, past cyber incidents or claims. For an average facility with $10 million in annual revenue, the estimated annual premium would be $20,000-$30,000.

Estimated Pricing: $20,000-$30,000

Equipment Breakdown Insurance

Sewage treatment facilities are critical infrastructure that rely on complex mechanical and electrical systems to treat wastewater. Unplanned equipment breakdowns can be very costly and disrupt operations. Equipment breakdown insurance provides protection against financial losses from equipment failures or breakdowns. It covers the costs of repairs or replacements of broken equipment, property damage, extra expenses from business interruption, loss of income from shutdowns, and inspection/testing of suspected problems. Common equipment at risk includes pumps, treatment systems, electrical components, and mechanical systems. Premiums are estimated around $12,000 annually based on facility size, employee count, equipment values, loss history, and actuarial rates. Larger, more specialized equipment typical of these facilities contributes to higher premiums.

Category List
Benefits
  • Covers the costs of repairs or replacements of equipment that unexpectedly breaks down
  • Pays for property damage and extra expenses incurred from an equipment failure
  • Covers loss of income if a breakdown causes business interruption or shutdown
  • Covers the costs of inspection, diagnosis and testing if equipment problems are suspected
Use Cases
  • Breakdowns or failures of pumps
  • Breakdowns or failures of treatment equipment like filtration systems or aerators
  • Breakdowns or failures of electrical systems like switchgears or transformers
  • Breakdowns or failures of mechanical systems like conveyor belts or screens

Based on typical equipment breakdown insurance policies for sewage treatment facilities, the estimated average annual premium would be around $12,000. This was calculated based on facility size, number of employees, typical equipment values, past loss history for the industry, and actuarial rates. The facilities in this industry typically have larger and more specialized equipment that is critical for operations.

Estimated Pricing: $12,000

Equipment Floater Insurance

Equipment floater insurance provides comprehensive protection for costly equipment used in sewage treatment facilities against risks of damage or loss. It helps ensure these essential businesses can continue operating smoothly even if equipment failures or losses occur.

Some key types of equipment commonly insured include pumps, pipes, specialty vehicles, maintenance equipment, treatment tanks and basins that are important assets for facilities. This coverage is especially valuable given the significant costs to repair or replace such machinery if damaged. Premium costs tend to average around $5,000 annually for typical risks at sewage treatment facilities.

Category List
Benefits
  • Covers equipment against risks of damage or loss
  • Protects against unexpected equipment repair or replacement costs
  • Covers equipment whether on or off premises
  • Covers temporary off-site equipment use
  • Covers transportation risks to and from jobsites
  • Covers equipment during maintenance or overhaul work
  • Covers degradation of equipment over time
  • One low premium protects entire scheduled equipment list
  • Policy automatically covers new equipment purchases
  • Ensures the business can keep operating smoothly even after an equipment loss
Use Cases
  • Protect pumps used to transfer sewage sludge or wastewater
  • Cover pipes, valves, and other plumbing infrastructure at the facility
  • Insure specialized vehicles like vacuum trucks used to empty septic tanks
  • Provide coverage for maintenance and lab testing equipment
  • Cover electrical controls, motors, and other machinery used in the treatment process
  • Insure large treatment tanks and basins that hold sludge or wastewater

Based on typical equipment values and exposures for sewage treatment facilities, the average annual premium for equipment floater insurance would be around $5,000. Premiums are usually calculated as a percentage of total insurable values and adjusted based on property protection class, claims history, and other risk factors. Since sewage treatment facilities tend to have large mechanical and electrical equipment that are costly to replace, the total insurable values and hence base premiums tend to be high.

Estimated Pricing: $5,000

Conclusion

Choosing the right mix of insurance policies tailored to a sewage treatment business helps protect its finances, employees and reputation. General liability, commercial property, workers’ comp and others discussed here provide essential coverage for risks inherent to this important industry.

Frequently Asked Questions

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