When one hears “Environmental” or “Pollution” damage, the first thing that typically comes to mind is an oil spill or other major events. As a contractor, you know that contamination can happen at even the smallest of sites, and in the most unexpected ways.
Pollution liability claims are severity claims, not frequency claims. This means that they may not happen often, but when they do, the financial loss is substantial. These claims are often NOT covered under standard Commercial General Liability policies. While there is coverage for third-party injuries or property damage most contractor’s policies typically contain pollution exclusions.
Pollution Liability Claim Scenarios
Residential (Illegal Disposal): a contractor disposed of sealants and solvents containing toluene in a covered dumpster. Two children entered the dumpster, were overcome by fumes and died. This resulting in a $2,000,000 claim for illegal disposal, etc.
HVAC (Mold and Mildew): a newly installed HVAC system in a commercial building grows mold and mildew, after 3 years, causing the release of bacteria. Bodily injury and property damage resulted in a claim that exceeded $500,000.
Site Contractor (Contaminated Soil): a site contractor utilized topsoil at 6 separate job sites. Subsequent testing discovered PCB’s in the soil. Remediation/restoration costs exceeded $180,000.
*(originally presented by James F Blasting – IRMI Construction and Risk Conference 2015)
Who Needs Coverage?
Many smaller operations believe that their exposure is small or non-existent but the risks associated with hazardous waste exposure is serious. I advise clients in the following fields to consider coverage:
What is Covered?
Pollution Liability insurance generally covers the costs associated with cleanup and liability claims as a result of pollution your business has created.
- Legal Fees: costs associated with hiring a defense attorney.
- Cleanup: when you are legally obligated to clean a site, the the carrier will compensate you for the cost of the cleanup.
- Property transfer: coverage for property that your company purchases that was contaminated by a previous owner.
- Errors: covers costs that arise in the event that a clean-up company wrongly declares a site or building free of contamination/pollution.
Interested in learning more about Contractor’s Pollution Liability Coverage? Call me today to discuss your exposure and what coverage is right for your business.
Opinions expressed in this article are solely the author’s opinion, not intended to provide the reader with legal or any other professional advice. Should you need advice or opinion, consult with a qualified professional to address your specific needs.