Contractor Insurance Requirements
Many jobs require contractors to provide evidence of pollution liability, however standard certificates of insurance are inadequate in demonstrating financial responsibility for pollution events. All Commercial General Liability (CGL) policies contain some form of total pollution exclusion. Occasionally carriers are willing to give back limited coverage by endorsement; however, these endorsements do not typically address all risks, leaving a contractor exposed. A Certified Environmentally Responsible Contractor (CERC) has secured an insurance policy that includes many coverages that are limited or excluded from a CGL policy. The table below highlights key issues with insurance coverages and how a qualifying CERC policy compares to a CGL policy.
Pollution Coverage Issues
CGL
CERC
Contractors Pollution Liability Practice Policy w/$1 million limit minimum
Cleanups of environmental pollution incidents can be very expensive and time consuming.
1st & 3rd Party Transport
Transportation pollution incidents may involve over the road accidents, leakage from containers on the trucks and/or trailers, and pollution incidents during the loading or unloading operations.
Mold Coverage
Whether mold fits the definition of a pollutant has been debated widely. Mold has the potential to lead to severe bodily injury or significant remediation costs.
NODS (Non-Owned Disposal Sites)
If a disposal facility has a pollution incident, environmental law can require the originators of the waste to pay for cleanup.
Job Site Cleanup
Cleanup and monitoring of pollution incidents are often required by the government. This coverage will also address negative impacts to groundwater and surface water on the project owner’s property and adjacent properties should the contamination migrate offsite.
Blanket Primary and Non-Contributory
The contractor’s insurance will be the first to pay and the only party to pay until the available limits of the insurance coverage are exhausted. Only then would the owner’s insurance respond to the claim. This concession by the contractor’s carrier can be granted on a blanket basis for any project.
Natural Resource Damage
A pollution incident may result in the destruction of plants, fish or wildlife and may not fit the traditional definition of “property damage” covered by a standard general liability policy.
Pollution Coverage Issues
No Limitation to Sudden and Accidental Pollution Release Only
Most CGL policies have a limited time element, which limits the discovery time frame (usually to 72 hours). With this limitation, any pollution that goes undiscovered, migrates, or increases in size would be excluded.
