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. What pollutants are impacting your business?
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 Plumbing Contractors
Include, but are not limited to: asbestos; mercury; lead; vapor intrusion; Repair, Renovation and Painting (RRP) for child occupied facilities; completed operations exposures including incomplete line hookup or improper system construction causing spills or emissions; fumes, emissions or spills of chemicals used during construction (finishers, sealants, adhesives, solvents, curing compounds); water contamination; raw materials stored at job sites; causing build up or release of airborne bacteria; mold resulting from water intrusion or moisture encapsulation; spills from mobile storage tanks; site preparation/excavation work through preexisting contaminated soil or impacting utilities or underground storage tanks; old septic systems; raw sewage ruptures; stormwater runoff….
Environmental Loss Examples:
- A plumbing contractor used a hole-saw while working at a jobsite. Unknown to the contractor, the saw punctured a water line in the building, allowing water to slowly drip from the pipe. Weeks later the property owner noticed dampness on the walls. After further investigation, the leak was discovered, along with mold that had developed. The plumbing contractor was responsible for cleanup costs totaling over $50,000.
- A plumber exacerbated an existing problem while updating and re-piping a commercial site. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor spent $250,000 in cleanup costs and defense.
- A school contracted plumbing work on its sewer lines. While dismantling piping, the contractor discovered a mercury spill that resulted in mercury contamination throughout the building. Costs to clean up the contamination and restore the building to its original condition was $350,000. The plumbing contractor was named in the suit for exacerbating the mercury spill.
- A plumbing contractor failed to properly seal the drainpipe in a condominium building. After several days, residents began to feel light-headed. After further investigation, gasses from the sewer system were determined to be the cause of the problem. The contractor faced several suits over bodily injury.
- A plumbing contractor disposed of sealant and solvents containing toluene in a covered, enclosed dumpster after performing routine finish work. Acting like a confined space, the dumpster trapped the toluene fumes which depleted the oxygen levels. After climbing into the dumpster for unknown reasons, two young old children were overcome by fumes and died. The contractor faced a sizable claim resulting from improper disposal of the toluene.
- While performing building renovations, a plumbing contractor used gas powered generators and equipment. The contractor failed to properly vent or contain the emissions from the equipment during operations. Employees working in a nearby area of the building complained of headaches, nausea and respiratory problems. The results of an air quality study concluded that the increased carbon dioxide levels in the building resulted from the construction equipment. The contractor was liable for causing building-related illnesses that resulted in multiple bodily injury claims.
- A plumbing contractor acting as the general contractor was responsible for overseeing a sewer rehabilitation project. During excavation of a trench, the bucket of a backhoe hit a natural gas line. This forced evacuation of the immediate area, including a small strip mall. Store owners filed loss of business claims against the contractor.
- During sewage installation, a plumbing contractor improperly tied in piping. This caused raw sewage to migrate into the underlying groundwater and contaminate residential wells. The contractor was faced with defense costs as well as sizeable to property damage and bodily injury claims from the residential community.
Benefits of Environmental Insurance
Plumbing Contractors generally lack the financial strength to self insure their environmental liabilities. Since every plumber 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:
- 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, .
- 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 will be impacted if you or a sub-contractor/vendor create an environmental loss.
Environmental Liability Insurance Products
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, asbestos, defense outside the limits, off-site disposal coverage ….
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?
TRANSPORTATION POLLUTION LIABILITY
Generally, commercial auto 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.