Contractor's Pollution Liability

Contractor's Pollution Liability is generally purchased only when it is required by contract. When a contractor is hired to service, repair, remodel, or build; there is a long list of insurance requirements including General Liability, Workers Compensation, Auto, Umbrella, etc. Lately we have been seeing more and more construction contracts that also require Pollution Liability. Depending upon the trade, the contractor may be able to get the client to waive the requirement for Contractors Pollution.

Not a single contractor client has ever called us and said, I want to buy a pollution liability policy because it keeps me awake at night just thinking about the exposures.” However after hearing about our client’s experience, this could change. Pollution Liability could become your worst nightmare.

A Plumbing and HVAC contractor that our agency has insured for many years, has many clients who own apartment buildings. Some of these apartments are equipped with boilers that are used to provide heat for the units. Our client was called to provide repair service on an apartment boiler which was not only old but was defective. There were other boilers in this boiler room that he was told not to work on that were also just as old and possibly defective. He did his job and fixed the unit he was hired to work on, he even informed the owner of the apartment of the other units and that they needed immediate work and provided an estimate for the repair cost. However, our insured was never called back to do the work because the apartment owner was either unwilling or unable to pay; which is still unknown. As a terribly unfortunate result of the owner not taking immediate action, fumes from one of the un-serviced boilers leaked into the apartment above the boiler room. The residents of the apartment inhaled the fumes in their sleep one night and sadly never woke up. Their children hired an attorney who filed suit against the apartment owner and everyone who had ever provided any service to their boiler room.

Since our client was one of the many service companies who had provided the company any service, they were named in the lawsuit. In my client’s defense, he had only made one service call on the boiler and had correctly serviced the boiler he worked on.

This did not stop the family from including our insured in the law suit and when we received notice, we turned the claim into both the General Liability (GL) and Pollution Liability carriers. The GL carrier denied the claim as their policy contained an “Absolute Pollution exclusion.” The pollution liability carrier is now defending our insured and will pay damage up to policy limits in case the court finds our client liable for the damage. At the time of this article, we do not know how the lawsuit against our insured will turn out, but we are happy that our client can go to sleep each night without worry about how this will affect his future knowing he is covered and that his legal bills are being taken care of by the insurance company.

Even though pollution liability coverage was not required by contract, our client continued to renew the policy and he has said he has woken up in the middle of the night Thanking God that he did!

Contractor's Pollution Liability

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