Contractors Pollution Liability (CPL) insurance.

ERMI has seen a tremendous rise in the number of construction projects requiring Contractors Pollution Liability (CPL) insurance.

For larger construction projects requiring CPL coverage, we feel the best CPL risk transfer strategy is for the project owner to purchase an Owner Controlled Contractors Pollution Liability (OCCPL) policy versus individual contractors purchasing CPL policies.

With OCCPL the owner negotiates the coverage and premium that best meets their project needs. The project owner will be the first named insured and will have dedicated policy limits for their project. The first named insured is the only one that can cancel the policy. Additional insured’s on the policy will be the general contractor/s and subs working on the project.

Contractors Pollution Liability (CPL) insurance protects the insured should they cause or exacerbate an environmental condition while performing their contracting services. Most policies can be endorsed to cover transportation pollution liability, mold, lead, asbestos, off-site disposal coverage….

Another advantage in executing an OCCPL strategy, it will lower the cost of the construction project.

Example of OCCPL cost advantage vs. individual contractors purchasing CPL coverage
Job: Build new commercial office building
Cost: $40,000,000
Number of construction companies: 20
Contractors Pollution Liability (CPL) rate: $1.00 per $1,000 of construction costs
CPL minimum premium: $2,500
CPL policy limits: $1,000,000/$1,000,000
Deductible / SIR: $10,000

Premium for OCCPL: 40,000 X $1.00 = $40,000

CPL cost for individual policies:

The general contractor will have to purchase a policy for the cost of the whole project. We will then assume for this example the other 19 construction companies will be at minimum premium ($2,500).

General Contractor CPL Premium: $40,000

19 subcontractors X $2,500: $47,500

Total Individual CPL Premium: $87,500

OOCPL Premium: $40,000

Individual CPL Premium: $87,500

OCCPL Savings: $47,500

With individual CPL policies you are assuming:

• The proper CPL insurance has been purchased
• They negotiated the most competitive premium
• They have completed operations coverage
• Any subcontractors they use have the proper CPL insurance in place
• Your project contract has been added to the CPL policy as an insured contract
• An unrelated third party claim will not erode or exhaust policy limits.
• The policy will not be canceled before project completion
• They will not pad the insurance costs an additional 10% adding to the bottom

ERMI Strategy #2: How to pay for the OCCPL insurance?

OCCPL supports and strengthens the value of any construction project while reducing