Construction Risk and Insurance Roundtable

Environmental Exposure and Coverage Options

Episode Summary

The market for Contractor and Professional Pollution Liability is very competitive, allowing for affordable and readily available coverage. In this episode, we discuss environmental insurance and effective measures that contractors should be aware of.

Episode Notes

The Issue. There are multiple exposures for releases of hazardous materials to soil, water and air during construction activities. Projects also present post-construction environmental exposures related to defective materials and/or workmanship.

Why It’s Important. There is increasing awareness of contractor exposure to claims for releases of pollutants at the job site and from completed operations. Many contractors, however, are uninsured or underinsured for these risks.

• Recent high-profile claims related to water contamination (Flint,
Freedom Industries) have demonstrated that even the peripheral
participants (e.g., engineering consultants and contractors) are
exposed to significant defense costs and damages in large class
action lawsuits.

• Environmental exposures may be excluded from General Liability
policies and, historically, this coverage was not regularly purchased
by the construction industry. However, heightened owner awareness
has recently resulted in an increase in specific contract
requirements for pollution coverage.

• There is a significant trend in large loss claims for mold at
commercial habitational buildings. Contractors (particularly those
involved in HVAC installation, roofing, curtain walls/windows) are
exposed to latent mold and indoor air quality claims that may not
surface for many years after construction is complete.

Short Answer. The market for Contractor and Professional Pollution Liability is very competitive, such that coverage is affordable and readily available. As awareness of water and indoor air quality issues and claims continues to increase, contractors should be aware that environmental insurance is a cost-effective measure to backstop these exposures.