Asphalt & Paving Contractors

What is a Pollutant? 

Any material, substance, liquid, product, etc… which is introduced into an environment for other than its intended use / purpose. Fresh water, cheese, and milk have all been classified as pollutants by Insurance Carriers under various circumstances. 

Many non-environmental contractors assume that claims arising from operations are covered by the general liability policy. However, claims resulting from a “pollution incident” are excluded from most general liability policies, which leaves many of these contractors exposed to potentially uncovered claims. What pollutants are impacting your business?

Environmental Exposures Impacting Asphalt & Paving Contractors 

Include, but are not limited to: air emissions from asphalt plants; transportation of raw materials and asphalt; natural resource damage; storage of raw materials; release of oils/fuels from equipment; spills from mobile storage tanks; excavating through and spreading of unknown preexisting contaminated soil; storm water runoff; ground water contamination; silica; coloring of decorative asphalt; blending & mixing of asphalt. 

Environmental Loss Examples

1. A road building contractor unknowingly spread petroleum-contaminated soil across a project site during fill operations for a commercial office building. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations the contractor was eventually removed from the lawsuit. However, they incurred $90,000 in defense costs. 
2. An asphalt paving contractor paved a parking lot for a new commercial structure. At the end of the day, the tack coat was sprayed onto the sub-base prior to paving. During the evening, a major thunderstorm caused the tack coat to wash off and flow into a nearby stream. The contractor was responsible for cleanup costs including natural resource damages, which exceeded $200,000.  
3. An asphalt paving contractor had a piece of equipment puncture a hole in the side of their liquid asphalt truck on a job site.  More than 800 gallons of liquid asphalt was spilled before they were able to contain the release. Clean up costs and business interruption was in excess of $150,000.
4. Neighbors of an asphalt plant filed a lawsuit for perceived bodily injury due to air emissions from the plant. The owner/operator of the asphalt plant was found liable by the courts. Legal fees and damages were in excess of $1,500,000
5. Vandals at a jobsite released the contents of an above ground storage tank used to fuel equipment for a street and road contractor. The cost to clean-up the 500 gallons released by the vandals was in excess of $80,000.
6. A contractor was subject to cleanup costs after vandals opened an onsite mobile refueling tank causing diesel fuel to be released onto virgin soil.

Benefits of Environmental Liability Insurance 

Asphalt and paving contractors generally lack the financial strength to self-insure their environmental liabilities.  Since every asphalt and paving contractor is impacted by environmental liabilities consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy versus self-insurance.

The Three Main Benefits environmental liability insurance offers:  

1. Defense Costs:  Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong you can still get named in a suit and have to expense defense costs i.e. legal fees, environmental investigations, etc.  
2.  Claim Management:  All policies come with specialists to assist you in handling a claim.  Who is in charge of communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
3. Third Party Liability:  The majority of the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption.  You need to look at your client’s and neighbors that can be impacted if you or a sub-contractor/vendor cause an environmental loss.          

Environmental Liability Insurance Coverages 

CONTRACTORS POLLUTION LIABILITY 

Contractors Pollution Liability (CPL) insurance protects the insured should they cause or exacerbate an environmental condition while performing their contractor services.  CPL protects the insured for covered operations performed by or on behalf of the insured, while operating away from any premises they own, rent, lease or occupy.

CPL can be offered on a claims made or occurrence basis.  Coverage can be written on a job specific basis, or on a blanket basis to cover all the work performed by the insured.  Most policies can be endorsed to cover transportation pollution liability.  

Contractors incorporating CPL coverage as part of their risk transfer strategy, drive their growth and profits by marketing the benefits CPL coverage affords in reducing job interruption due to environmental issues.     

ENVIRONMENTAL IMPAIRMENT LIABILITY (EIL) 

EIL is for contractors that own, rent, lease, operate or have any other insurable interest in real property (a fixed site facility such as a shop, asphalt plants….) that can be susceptible to pollution liabilities that actually or allegedly originated from the insured property. 

Coverage can include: Pre-existing unknown pollution, new pollution conditions, first party on-site clean up, third party bodily injury, property damage, business interruption and extra expense, off site cleanup costs, legal defense expenses, transportation pollution liability, offsite disposal coverage….  Multi year term policies can be negotiated. 

TRANSPORTATION POLLUTION LIABILITY

Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of transported cargo. Transportation pollution liability affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and overturn of transported cargo.    

UNDERGROUND STORAGE TANKS 

Financial responsibility requirements ensure that owners and operators of underground storage tank systems have the ability to financially handle a release from an underground storage tank. The responsibility encompasses the ability to pay funds for corrective action and third party bodily injury and property damage from non-sudden and sudden and accidental releases from a regulated underground tank system.