In our previous article on Contractors Pollution Liability (CPL) insurance, we underscored the fact that all types of contractors performing operations or conducting work – from environmental or remedial contractors to general and specialty trades – should have this coverage as part of their risk management program to protect against large or even catastrophic losses. But the fact is that many still opt to ignore the exposure or rely on their balance sheet (knowing or unknowingly) to address the risk. It is prudent then for brokers to underscore the need for their clients to implement Pollution Liability coverage in their projects.
First review what is meant by pollutants: They can include any solid, liquid, gaseous, or thermal pollutant, irritant, or contaminant including, but not limited to smoke, vapors, odors, soot, fumes, acids, alkalis, toxic chemicals, hazardous substances, electromagnetic fields, low-level radioactive waste and material, mold matter, Legionella, and waste materials (including medical, infectious, and pathological wastes). Then help put what this means into context for the insured by providing examples of pollution liability exposures faced by certain types of contractors. This includes:
- Excavation Contractors: Impacting groundwater from drilling and excavation work (dewatering operations, etc.).
- Concrete firms: Residual contamination from improper control of oil and lubricants used for the concrete forms.
- Demolition Contractors: Inadvertent disturbance and airborne release of pre-existing contamination or products (i.e. naturally occurring asbestos in subsurface soils/geology, contaminated soils, surface or groundwater, etc.).
- Drilling Contractor: Cross-contaminating aquifers by drilling through contaminated soil and into the groundwater.
- Electrical Contractor: Responsibility for damages and/or pollution releases arising from power cut off on client’s facility pollution control equipment, fire sprinkler systems, electronic monitoring devices, etc.
- Interior Renovation Contractor: Fumes, emissions, and spills from chemicals (volatile organic compounds) applied during construction (finishers, sealants, curing compounds, floor coatings, adhesives, etc.), and from equipment exhaust, causing respiratory hazards.
- Roofing Contractors: Toxic mold exposure caused by water entering a building’s roofing system or substructure due to improper installation of the roofing system.
- Steel Erectors: Fumes from welding operations causing adverse health effects on workers. This is primarily a third party over action expense; nonetheless, it can expose the organization to environmental liability.
- All Construction Trades: Various exposures from subcontractors who perform work onsite or transport and dispose of waste materials or soils.
CPL Steps In to Address Environmental Risks
It’s important for a contractor to understand that Commercial General Liability insurance excludes pollution exposures, making the CPL policy necessary. A CPL policy can be designed to include the following coverages:
- Jobsite pollution liability
- Natural resource damage
- Mold, fungi, Legionella
- Non-owned disposal site
- First-party emergency remediation or cleanup costs
- First-party protective pollution liability
- Sudden and accidental coverage for client’s owned, leased, or rented locations
Coverage is available on a per-project or blanket program basis. Project policies provide coverage for all operations performed by the insured during the construction period and can include "tail" coverage (extended reporting period (ERP) for claims-made policies and completed operations for occurrence policies) to address the statutes of repose in many states or other contractual requirements. Usually, a maximum term of 12 to 13 years is offered. A blanket program provides coverage on an annual basis for all defined covered operations taking place during the policy term.
RPS provides CPL insurance with a broad definition of pollutants, which includes fungus, legionnaire’s mold, EIFS, asbestos, lead and silica, as well as comprehensive definition of bodily injury. You can review the various options available with our CPL coverage on our online portal as well as quote and bind coverage. If you’d like additional information, please call one of our RPS professionals.