Contractor Pollution Liability
Almost every contractor's standard general liability policy contains a pollution liability exclusion, which is almost an "absolute" pollution exclusion. Many contractor insured's assume that, unless they are engaging in environmental remediation work, they have no pollution liability exposures which may be excluded by the standard commercial general liability policy. However, many courts have ruled otherwise and it is imperative that a contractor understand the scope of pollution liability coverage under their commercial general liability policy, the availability of limited pollution liability endorsements and the existence of broad form pollution liability policies if needed.
The standard CGL policy provides two important areas in which an insured contractor does have significant pollution liability coverage; i.e., certain incidental pollution exposures, in connection with off-premises operations and completed operations. Please consult your agent for a more detailed analysis of your policy than is possible here.
There is no coverage with respect to a contractor's operations involving the hauling, treating or disposal of waste.
CGL pollution liability coverage does apply to operations at non owned premises except for:
- when the job entails pollution clean up or such, or
- where the pollutants were brought to the job site by the insured contractor in connection with its operations, excluding any fluids necessary for the normal operation of "mobile equipment."
This preserves liability coverage for many types of construction operations, including sudden and accidental property damage claims at a job site. Furthermore, nothing in the standard CGL pollution liability exclusion refers specifically to the completed operations hazard so a completed operations liability claim would be covered unless it is within the scope of another exclusion.
However, there is virtually no coverage for testing, clean up, or removal of pollutants, no coverage including completed operations at a waste disposal site; i.e., Superfund or CERCLA liability and no coverage for government mandated clean up claims.
Sometimes an insurance company will try to attach a total pollution exclusion endorsement to a contractor's CGL policy. The basic policy excludes coverage for damages arising out of the "discharge, dispersal, seepage, migration, release, or escape of pollutants." Pollutants are defined as "any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste."
A contractor should resist attachment of a total pollutant liability exclusion endorsement since various courts have interpreted pollutants in such a broad fashion as to exclude almost any injurious substance.
Instead of accepting restrictive endorsements, a contractor should ask their agent to explore expansion of pollution liability coverage via limited pollution liability endorsements, or even a broad form (occurrence) pollution liability policy to round out its general liability program.