Pollution and environmental exposure risks on site and during transfer and disposal, such as toxic mold, the disposal of contaminated soil, and broken pipelines releasing toxic materials, are major construction concerns. When such incidents happen, a contractor's reputation and livelihood can be irreversibly impacted.

Contractors Pollution Liability (CPL) is a type of insurance designed to protect contractors against the liability issues and financial losses that result from such environmental incidents. This insurance covers an array of environmental and pollution risks that are common to construction projects and is considered an appropriate coverage whether a firm is a trade contractor, such as those specializing in paving or HVAC; a general contractor; remediation contractor; or a contractor doing specialized work, such as tank installation or drilling.

Contractors Pollution Liability insurance is available to cover areas like pollution incidences that result in bodily injury, third-party property damage, or remediation costs. Comprehensive policies can even be customized to provide pollution risk coverage to an entire project, which would include off-site transportation and all contractors involved in the project. Most Contractors Pollution Liability policies are written on a claims-made basis. This basis limits the insurer's risk for unknown future liabilities since it means the policy only pays claims occurring and being filed during the period covered by the policy.

Clearly, Contractors Pollution Liability insurance can provide invaluable protection against environmental-related financial losses. That said, such a policy doesn't prevent environmental incidents from occurring in the first place. To help prevent environmental incidences and protect hard-earned reputations, contractors should additionally adopt effective environmental risk management practices.

Creating an environmental risk profile will be one of the most important factors when taking steps toward risk management. This allows the firm to identify possible loss exposures and risk areas by thoroughly reviewing their administrative control documents. While some firms opt to conduct the profile in-house, many prefer the expertise and outsider's perspective offered by a professional environmental consultant. In any event, documents related to the following areas should be reviewed during the development of an environmental risk profile:

  • Contractors Pollution Liability policies
  • Standard client agreements
  • All mold prevention programs
  • All environmental management programs
  • Subcontractor's environmental/mold management/prevention systems
  • Language of subcontractor agreements
  • Environmental data searches of job sites
  • Hazard communication programs
  • Quality assurance programs
  • Internal health and safety programs, incident response protocols, and training protocols
  • Trends, history, corrective measures, and employee communications related to environmental losses
  • Environmental assessments for all leased and owned properties

Once the above documentation is assessed, the firm can identify strategies to reduce, if not eliminate, their exposures to environmental risks. Combining risk management with a Contractors Pollution Liability policy can help contractors reduce their risk, but still be covered in case the unexpected happens.

Need insurance for You, Your Family or Your Business?
We can match you to a qualified, local insurance expert!
Further Reading
Environmental Testing Labs offer environmental testing for soil, water, petroleum, sludge and other samples. In an unpredictable world, even the most knowledgeable and experienced professionals make mistakes. For this reason, professionals that work ...
Site management includes proper storage of fuels and other potentially toxic supplies. Fuel tanks require secondary containment for rupture control and a safe low-traffic location. Other potential toxins need proper containment and inventory contr...
A project architect or engineer typically carries responsibility for the design of a house, high rise or other structure. However, contractors now also play a role in project design and may be liable if something goes wrong. Consider the benefits of ...
The latest trend in environmental risk management is vapor intrusion, usually referencing toxic fumes from historical external spills penetrating the building envelope creating unhealthy air conditions. Unfortunately, the canaries in the office co...
Why should every start-up company consider environmental liability coverage? The harmless products and processes of the past have emerged as dangerous long-term pathogens of the present many times - lead-based paint, asbestos, even cigarettes....