You’re on a jobsite, and your bulldozer knocks over a barrel of waste oil, contaminating the ground. During an excavation project, you hit a sewer main, releasing contaminants into a nearby stream. Are these claims covered by the Commercial General Liability Policy you purchased?
The unendorsed Commercial General Liability Policy may provide some Pollution Coverage for contractors who do not test, monitor or clean up pollutants. The general rule is that no coverage applies if a contractor brings the pollutant to the site with him, but that coverage does apply if he releases a pollutant that’s already there. There are exceptions to the first part of rule, and there may be coverage if, for example: the pollutant is used to power mobile equipment; there is a fire, or the claim involves fumes in a building where work is being performed.
The problem is that most contractors don’t have an unendorsed Commercial General Liability Policy. Most insurance companies add exclusions that take away the limited pollution coverage in the standard coverage form.
The answer for contractors looking for coverage is Contractors’ Pollution Liability Insurance. These policies pay the remediation costs that are incurred when a contractor’s operations result in a pollution incident. These policies also cover claims made by third parties for bodily injury or property damage that arises from the pollution incident. In some cases, coverage can be added for pollution exposures on the premises of the contractor – an oil storage tank, for example. Some companies may also include coverage for transportation of pollutants on a vehicle.
Many construction contracts will require that a contractor carry Contractors’ Pollution Liability coverage. Policies can be written to cover all operations of a contractor, or to cover a specific project. Coverage is available on a claims made basis or an occurrence basis, and it’s important to discuss the difference between these forms with an insurance advisor.
When selecting a Pollution Liability Policy, be especially careful if your work involves certain kinds of pollutants. Contractors who do asbestos removal or lead abatement work, for example, may find that this type of work isn’t covered by a Contractors’ Pollution Liability Policy, and that a special endorsement or policy is needed.