By Ivy Riggs, Executive Underwriter
After years of supporting smoking cessation campaigns, life and health insurers may be delighted that their efforts seem to be paying off. According to recent CDC statistics, tobacco smoking in the United States has declined from nearly 21% in 2005 to less than 18% in 2013. What may be less encouraging however is that marijuana smoking, at least among teens, has increased an average of 13% over the same time period. Although the jury may still be out among the life and health insurers in weighing the implications of this shift, for property and casualty insurers some key questions are only just beginning to be asked.
In order to better understand this lag, it is important to consider that thirdhand smoke is a relatively new concept. Better known are firsthand smoke (what smokers voluntarily inhale themselves) and secondhand smoke (what non-smokers involuntarily inhale due to proximity to a smoker). Thirdhand smoke is quite different. Resistant to normal cleaning, this is the residue left by smoke in an indoor space, deposited on furniture, carpeting, walls, and other interior furnishings. Researchers in California have proven this residue to be not only carcinogenic but also persistent within indoor environments, becoming progressively more toxic over time. Children are believed to be most at risk for this type of involuntary exposure because they are more likely to crawl or play on contaminated surfaces, including touching, mouthing, inhaling, or otherwise ingesting residuals. Such exposure to thirdhand smoke can contribute to asthma and other respiratory problems, as well as cognitive and behavioral deficits. Interestingly, because tobacco and marijuana smoke are chemically and physically alike, both have been similarly implicated in the harm they can each produce, completely independent of the presence or absence of either nicotine or THC.
For commercial real estate stakeholders, these facts raise a specter of liability for property damage and/or bodily injury claims that may not have been previously considered. What if, for example, an owner of hotel openly forbids smoking in their facility but certain guests choose to ignore the directive? Certainly hoteliers can and do charge violators for additional cleaning services that may be needed. But how good of a cleaning is necessary to thoroughly address the problem? Does a specialized restoration contractor need to be brought in to decontaminate the upholstery, carpeting, bedding, and wall coverings? Will there be downtime and business income loss associated with the decontamination? What if a penalty fee is assessed to a violator but no extra cleaning in fact is ever performed, leading a future guest to claim subsequent injury? Are there any differences in potential liability based on whether the smoke damage is from tobacco or marijuana?
One possible solution to addressing these concerns may lie with a Site-Specific Pollution liability insurance policy. Currently no standardized form exists for this coverage, so a careful review of policy provisions is critical, particularly with regard to definitions of key terms such as pollutant or pollution condition. A recent survey of more than twenty leading carriersâ€™ Site Pollution products revealed that all of them included “smoke” within their definitions, but that none of them went on to define the word itself. While this fact is not meant to suggest that â€œsmokeâ€ is an ambiguous term, it is important to review the insurance contract in its entirety, particularly with regard to intentional acts and other common exclusions.
As the legal environment continues to shift with regard to both public and private smoking in the United States, it is prudent to review one’s risks and methods of transferring that risk on at least an annual basis. Partnering with a specialist who keeps up-to-date on the latest developments in environmental risk management can be a great first step in these assessments.