Contactors Pollution Liability Insurance
A. Contractors Pollution Liability (CPL) - a few items to consider:
1. Insuring Agreement - DUAL TRIGGERS are dangerous
Whether it's a Practice Policy or Project Specific Policy you should contact us if your policy’s Insuring Agreement has a dual trigger. There should only be a single trigger - that being language akin to:
Coverage for a LOSS, or Bodily Injury, Property Damage or Clean-up Costs, or a Pollution Condition caused by YOUR WORK or YOUR CONTRACTING SERVICES or some other similar language (emphasis added).
The YOUR WORK or similar language should be the single and only trigger. But in some policies it is NOT. For example, there are policies that specify that coverage only applies if the:
LOSS or Bodily Injury, Property Damage or Clean-up Costs or a Pollution Condition was also caused by an "OCCURRENCE" - which is the second or dual trigger. This is potentially problematic and must be avoided. Underwriting companies that employ this dual trigger requirement support it’s utilization by noting that a CPL policy was developed as a spin-off of a Commercial General Liability (CGL) policy. The problem - what’s an"OCURRENCE"? CGL policies typically define an “OCCURRENCE” as an accident. Is faulty work an accident? CGL case law is voluminous on what is and what is not an "OCCURRENCE". In many jurisdictions, insurers restrict coverage for faulty work under a CGL policy because courts have determined that faulty work may not be an “OCCURRENCE”or an accident. If your CPL carrier contests a claim because it is not an “OCCURRENCE”, what case law do you think that insurer will attempt to rely upon to determine what is or what is not an “OCCURRENCE” under a CPL policy? Obviously some CPL insurers will refer to longstanding CGL case law. Do you or your client need that? Of course not. Why then have a policy that could place you or your client in a big jam?
2. Does the policy have a Consent to Settlement Clause? - That being, language that requires the INSURER to provide the INSURED with prior written notice before they settle a Claim. Some policies don’t. Rhetorical Question: Why would you or your Insured not want to be notified in advance of the carrier’s likelihood of settling a Claim?
3. Does your policy contain a DAMAGE TO YOUR WORK EXCLUSION? If so, is there an exception that totally nullifies the exclusion; or does the exception to the exclusion only apply to work performed by a Subcontractor? If the latter (or something more onerous) you should contact us.
4. The Employers Liability Exclusion of your Project Specific CPL - is likely not properly modified if sub-contractors (one or multiple) are also included as INSUREDS under the policy. While there may be an appropriate Contractual Liability Exception to the Exclusion; what about other types of claims? Does your policy address that?
5. Severability - a big item. This is our last item but maybe it should be the first. Why? There is Severability of the Application- which protects Innocent Insureds in the event that information was misrepresented (intentionally or unintentionally) or concealed during the application process. There is also Severability of the Intentional Acts Exclusion(s)which protects Innocent Insureds in the event that another Insured committed an intentional, fraudulent or similar act. And; Severability for Breach of Policy Conditions - which provides protection in the event that an Insured breaches its Duties and Responsibilities under the policy. These are essential. You need to contact us if you or your own, or your client’s policy is lacking.
B. Site Pollution - also a few items to consider - there are many more:
You should contact us if you have questions as to whether you or your client’s Site policy properly addresses any of the following:
1. Underground Storage Tanks (UST) - Reinstatement of Annual Limit of Insurance as Required by the Code of Federal Regulations (CFR) - Do you or any of your clients maintain a multi-year Site Pollution Policy (not a stand-alone UST Policy) that provides coverage for Scheduled USTs? If so, do the policy limits reinstate annually for USTs? If not you or your client may be in violation of the CFR's Financial Responsibility Requirements which under many circumstances requires annual reinstatement of limits for Pollution Conditions caused by USTs.
2. Has any Naturally Occurring Materials or Radioactive Materials Exclusion been negated, neutralized or appropriate softened?
3. Does the policy’s definition of CLAIM include a request to waive or toll a statute of limitations? Separately, is the Insured required to report Pollution Conditions/Circumstances that may give rise to a CLAIM? AND does the policy provide coverage for post-expiration CLAIMS made against the INSURED involving such Conditions reported during the policy period? While not every Site carrier provides this, it can be negotiated. This is an important coverage extension.
4. Definition of POLLUTANTS or POLLUTION CONDITION: Do you or your client have an exposure to Electro-Magnetic Fields (EMF)/Electro-Magnetic Emissions (EME)? If so, does the definition of POLLUTANTS or POLLUTION CONDITION affirmatively include EMF/EME?
5. Does your Policy contain a Real Estate Development Endorsement which restricts coverage for Dewatering Expenses or Soil Removal and Disposal Expenses pertaining to property that is planned to be developed? If so, you should contact us as it is likely that the Endorsement may not provide an appropriate exception to such Exclusions.
6. Material Change in Use Exclusions - This Exclusion should not be unqualified. It must include appropriate exception(s).