Contractors Pollution Liability Insurance: Don’t Overlook Coverage Gaps
Contractors can encounter pollution risks in their daily operations. A single pollution incident can bring significant costs related to cleanup and remediation. Moreover, environmental claims are generally not covered under most General Liability policies, and property owners often do not require pollution insurance. As a result, uncovered losses can arise, leading to legal disputes and financial consequences.
Contractors Pollution Liability coverage is available to fill the insurance gap for environmental incidents. Contractors Pollution Liability insurance (CPL) provides coverage for bodily injury, property damage, cleanup, and related defense costs from contracting-related pollution incidents. CPL policies are intended to cover a wide variety of contractors, but can be modified to include specific needs. These policies can be offered on a claims-made or occurrence basis, and can often be offered on a project or blanket program basis.
CPL Coverage in Action*
Situation: Three months after renovations were completed at an elementary school, a teacher became ill allegedly from odors entering her classroom. The school filed a claim against the general contractor, alleging that their subcontractors created a dangerous environment by failing to prevent water intrusion, high humidity levels, high carbon dioxide levels, proper air circulation, and mold growth. The teacher was diagnosed with occupational asthma and sought to cover costs associated with bodily injury, lost wages, and pre-and post-judgment interest.
Result: The general contractor had a CPL policy with coverage for any of their subcontractors. Although subcontractors performed the work, the general contractor was liable for the work. The initial claim was mediated from several hundreds of dollars down to just over $100,000.
Situation: During the construction of a residential community, excessive soil erosion and site run-off from the work site contaminated a local creek. Several local groups filed suit against the general contractor and owner, alleging the defendants violated the Clean Water Act and state water statutes. Also, it was alleged that the defendant’s method to control soil erosion contaminated the site with phosphates and caused excessive algae to grow. The development owner then sued the general contractor for breach of contract.
Result: Site run-off is one of the leading causes of water contamination during construction. Fortunately, the general contractor had a CPL policy with an endorsement for silt and sedimentation. The run-off and subsequent contamination were covered under the policy. The claim was settled for less than $100,000 with a full release of liability for the general contractor.
What Types of Contractors Need CPL?
- Carpentry or Framing
- Construction Management
- Excavation/Site Development
- General Contracting
RBN CAN HELP
A CPL insurance policy can provide much-needed security in the event of a pollution incident. Let RBN Insurance Services work with your organization to find the CPL coverage that is right for you.
* Case Studies Pulled from AIG