Some pollution insurance policies also contain liability clauses, which protect the company from third-party claims attributed to the environmental destruction it caused. For instance, if a company releases toxic materials into a body of water, the local fish population could die off from the poisoned water. Local fisheries and seafood providers would be negatively affected by the loss of fish and could sue the polluter for lost income. Pollution insurance covers legal defense costs and judgment amounts for the polluting company.
Pollution insurance coverage comes with limits. Companies that commit multiple offenses or engage in a massive pollution incident can quickly exceed the limits of their pollution insurance coverage. When the company exceeds the limits of its coverage, it must make up the difference from its own revenues, so the business owner must take precautions to prevent such incidents while maintaining the policy.