Painting 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 Painting Contractors 

May include, but are not limited to: Renovation, Repair and Painting (RRP) Federal Law of 2010;  Disturbing / impacting / exacerbating asbestos, lead, mold;  PFOA’s;  Overspray of paints and other pollutants used;  Spill of materials used during transit;  Spill of materials while at a job site;  Spills from mobile storage tanks; Sick building syndrome created from drying of paint / off-gas;  Lead abatement services;  Storm water runoff;  Ground water contamination; Underground utilities;  No auditing of waste handling and disposal companies; Natural resource damages;  Vapor intrusion;  Waste waters generated from cleaning equipment;  Release of oils/fuels from equipment;  Vandalism; Spills during loading, unloading and transportation of paint;  Warehousing raw materials and finished paint;  Toxic Release Inventory (TRI) chemicals; Products pollution;  Damaging fuel tanks, hydraulic fluid lines, boilers, utilities, etc. while power washing at a customer’s location;  Faulty hose hook-up and/or pump failures;  Accidentally using contaminated water while prepping;  Odor drifting;  Containment system failures;  3rd party nuisance claims;  and more…

Painting Claim Scenarios

1. While painting the interior of a nursing home, the contractor was sued by over a dozen residents alleging that they were overcome by fumes as a result of inadequate venting. Total claim was over $200,000.
2. While working at a jobsite, a painting contractor accidentally punctured a small water pipe which was located behind the wall. The contractor did not notice the water leak, which lead to a substantial amount of mold grew between the walls. The contractor was held responsible for clean-up of the mold as well as third party bodily injury claims, which totaled over $150,000. 
3. A child who lived in an apartment building constructed in the 1970s was diagnosed with lead poisoning. The renovation of the building by a painting contractor allegedly caused unsafe conditions for the child, and the child’s parents filed a bodily injury claim against the painting contractor. As part of the claim investigation, an expert was hired and other potential causes for the lead poisoning were discovered. As a result, the painting contractor wasn’t held liable. However, the contractor still accumulated over $50,000 in legal fees fighting the claim. 
4. After applying a coat of paint to a new commercial structure, a sudden rainstorm that wasn’t forecasted washed paint from the exterior of the building into the surrounding ground. Cost to remediate the paint from the soil was roughly $40,000. 
5. A painting contractor stored drums of spent solvents at a jobsite.  While employees were moving the drums, the fork lift operator accidentally knocked the drums over.  Before the spill was contained, solvent ran across the property and onto neighboring properties and into a small creek.  Claims for cleanup costs, third party bodily injury and property damage, legal fees, natural resource damages along with third party business interruption costs exceeded $500,000.
6.  A painting contractor was hired to perform work at a property that had just been restored from flooding / file. Several months after the job had been completed, mold was discovered between the walls where the painting contractor had worked, and a suit was filed.  After further investigation, it was found that the mold was due to a failure made by the restoration contractor. The painting contractor was removed from the suit. However, they had already expensed over $25,000 in legal defense fighting the claim. 
7. A painting contractor hired a waste hauler to transport its left-over paints and solvents to a 3rd party disposal site. The waste hauler got into an accident which caused the contents of the tanker to be released directly into a creek.  Under Federal law (CERCLA) you own your waste from cradle-to-grave, so the painting contractor had to pay their apportionment of the remediation costs, which totaled $300,000.     

Pressure washing Claim Scenarios

1. A painting contractor was sued when mold was discovered at a commercial building a year after they had completed a painting job. While cleaning the area with high pressure hoses, the painter unknowingly punctured a water line. Lover time the water built up insured the building walls, which caused mold to develop. The contractor was responsible for remediation, 3rd party bodily injury and property damage, as well as 3rd party business interruption, as the customer had to suspend operations while the mold was being remediated. Total cost of the claim exceeded $600,000. 
2. A contractor used high pressure cleaning equipment to clean insured an industrial building prior to painting. It was later found that the HVAC system was home to a dangerous fungus, which spread throughout the building during the cleaning. A number of employees in the building became infected with the fungus. Some of which were critically infected. The contractor was found liable for the spread of the fungus and faced bodily injury and property damage claims in excess of $1 million.
3. While cleaning a commercial production area prior to painting, the contractor unknowingly sprayed areas coated with lead based paint. Lucky for the contractor, the exacerbation of the lead based paint was discovered shortly thereafter, preventing any claims for 3rd party bodily injury. The total cost to survey and remediate the lead paint was $50,000.  
4. 6-months after completing a job, the customer discovered mold in their building. The customer sued the painting contractor for the cost of remediation. After further investigation, it was determined that the painting contractor was not responsible for the mold, and was removed from the suit. However, they had already expensed over $20,000 in legal fees. 

Overlooked Benefits of Environmental Liability Insurance

• 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.  

•  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….?

• 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 (CPL)

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, mold, lead, and asbestos, defense outside the limits, off-site disposal coverage, and more. 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.  A major environmental liability exposure faced by all contactors lies in who they are doing business with.  If there is an environmental loss at a job site, innocent contractors can and do get named in lawsuits.  Do your subs/vendors have CPL insurance if they cause an environmental loss?

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, batch plants, cement manufacturing/mixing plant….) 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.    

Incidental Professional Liability 

Professional exposures are generally excluded from General Liability and monoline Contractors Pollution Liability policies. In the course of their normal operations, contractors face all types of professional exposures. They may make slight adjustments on the provided plans to get the job done properly, they may supervise subcontractors, or provide other recommendations which could potentially be questioned in the event of a claim. In the event of a professional claim, will your insurance provide coverage?