What Is Contractors Pollution Liability?

Contractors used to enjoy pollution liability protections through their general liability policies. Once separate pollution liability policies emerged in the 1980s, contractors were soon required to purchase a CPL policy if they wanted protection from common environmental risks. 

What Is a Pollutant? 

Individual policies will define what qualifies as a pollutant for the purpose of coverage. Pollutants are typically liquid, solid, or gaseous contaminants or irritants that may include fumes, smoke, vapor, waste, chemicals, mold, bacteria, and asbestos. Each policy is unique, so holders should read the fine print for a clearer idea of specific terms and conditions. 

What Does Contractors Pollution Liability Cover?

As with any insurance policy, this varies. Most policies will provide some level of coverage for cleanup, bodily injury, property damage, and legal defense costs associated with a qualifying environmental incident. These can include gradual and sudden-onset incidents. Policy limits determine how much the insurer will pay toward these expenses. 

Here are several important terms to know regarding contractors pollution liability policies:

Cleanup refers to the process of removing the pollutant or contaminant. 

Example: A septic contractor’s truck spills raw sewage in a roadway. 

Bodily injury typically includes sickness, physical harm, disease, and death. 

Example: A landscaper spills pesticide, and the fumes sicken a child in the neighborhood. 

Property damage is usually understood as physical injury to a building, vehicle, or other tangible property.

Example: A plumber spills drain cleaner, and it burns a hole in the flooring. 

Legal defense refers to the cost of legal representation if a claim goes to court. 

Example: A gas station chain hires a contractor to replace existing storage tanks. After the job is completed, the gas station owner claims the contractor broke a tank and contaminated the soil. The contractor claims the soil was already contaminated, the gas station owner files a lawsuit, and the contractor needs legal representation. 

Who needs contractors pollution liability insurance?

While CPL might be an obvious choice for those who specialize in environmental cleanup and hazardous waste removal, any contractor who works with potentially hazardous materials may benefit from coverage. CPL policies typically cover incidents involving both chemicals and natural contaminants, so even those who do not regularly work with dangerous materials might consider a policy if their work could result in a water leak that promotes mold, bacteria, or mildew growth.

Prime candidates for CPL policies include contractors in the construction industry, such as home developers, plumbers, roofers, and landscapers; trade professionals, such as industrial contractors, HVAC workers, and storage tank installers; and operations contractors who specialize in fields like maintenance, wastewater removal, and airport fueling.

An insurance provider can help you decide whether a CPL endorsement is a good option to protect against risks in your industry. 

Types of Contractors Pollution Liability Coverage

Blanket

A blanket policy protects against qualifying incidents from covered operations that occur within the policy term. These policies are usually annual, though some multi-year policies are also available.

Project Basis

Project basis policies cover claims that arise during a specific project. They may also include tail coverage, which continues to protect against incidents that happened during the coverage period once the policy has expired. 

Occurrence Basis

Occurrence policies provide coverage for incidents that happened within the policy period. Coverage continues for those occurring during the policy period, even after the policy is canceled.

Claims-Made Basis

Claims-made policies cover incidents that occur during the policy period when the claim is also filed during this period. 

Keeping Track of Your Contractors' Insurance Certificates

One contractor may carry several different insurance policies, which can complicate tracking their certificates of insurance. Business Credentialing Services specializes in certificate of insurance tracking, providing an easy solution to gather, store, and review them. Contact us today.