Environmental risks are part of every construction job. Therefore, contracting firms should expect a range of exposures that may not be covered by their standard insurance policy. Most commercial general liability policies specifically exclude construction exposures where there is an environmental liability risk. Insurers do this by attaching a total pollution exclusion to a CGL policy. Not only does this exclude bodily injury or property damage as a result of an environmental mishap, but it also eliminates coverage associated with the cleanup, removal and even detoxification of pollutants at the job site.
So, what are your options for clients running a construction business who may encounter environmental calamities stemming from inclement weather, inferior building materials, waste from failing equipment and other pollutant-related risks associated with the ongoing operations on a project?
Contractors Pollution Liability
Many carriers offer a number of pollution liability policies. A good place to start is with a contractors’ pollution liability (CPL) policy. Simply put, a CPL policy protects a contracting business against lawsuits and damages from environmental harm or pollutants resulting from work performed, including work by subcontractors.
Coverage under most CPL policies typically includes third-party claims (including defense costs) as well as cleanup costs arising from bodily injury, property damage and environmental damage sustained in conditions involving a covered pollution event as defined in the insurance contract. Coverage may also include non-owned disposal sites, transportation exposures and owned premises. Depending on the carrier, some insurers will allow coverage to be obtained on a project-specific basis with extended reporting terms.
Coverage for Certain Trades
Often a contracting business will perform work in a particular trade or area that presents an above-average risk of pollution. To determine the individual needs of your clients, you must first understand the exposures presented by the business. The following present some, but not all, areas and trades in which your contractor clients may want to consider coverage under a CPL policy:
- Grading, sitework and excavation.
- Abatement and remediation.
- Street and road maintenance.
- Sewer, waste treatment and utilities.
- Electrical; heating, ventilation and air conditioning; and mechanical.
- Industrial facilities and pipelines.
- Above- and below-ground storage tanks.
A single pollution incident can significantly impact a contracting business. Start by assessing the needs and risk exposures of your contracting clients and evaluating whether a CPL policy is right for their specific operation and projects.
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