In the last few years, granite has become a fashionable and trendy building material due to its natural beauty, shine, durability, and scratch/heat resistance. Granite is an igneous stone, mainly formed through volcanic material such as magma. It is primarily made of quartz, feldspar, and potassium, and is an extremely hard material that is easier to maintain than marble. Installing granite countertops in homes and offices has created a huge amount of business for granite countertop contractors—the service and installation has become a very lucrative component of the building and remodeling industry. With the prevalence of granite in homes and offices today, there has been some recent concern over the pollution exposures for people working with, and living around, this popular stone.

Measuring and cutting granite takes a great deal of precision and is almost always outsourced to contractors specializing in granite countertop installation. These professionals will take very exact measurements for the countertops and create a template, which is used to cut the stone. As you may imagine, the dust associated with cutting granite is composed of very fine particles that can be extremely hazardous if inhaled into the lungs. When exposed to even low levels of granite dust over a long period of time, there is a potential for different types of serious respiratory illnesses.  In addition to countertop contractors having this exposure, many companies will let customers come to their facilities to choose their own slabs of granite for their countertops. Inviting people onto the facility presents an additional pollution liability risk for these companies, since there is usually a large amount of dust on the company premises.

Another exposure concern with granite is the potential for it to emit radon gas into the air. “Radon is a naturally occurring radioactive gas found in soils, rock, and water. It is the largest source of exposure to naturally occurring radiation…The National Academy of Sciences (NAS) concluded after an exhaustive review that radon in indoor air is the second leading cause of lung cancer in the U.S. after cigarette smoking,” as explained on the Environmental Protection Agency website. Although allegations that granite countertops may emit toxic levels of radon are still in question, many government officials suggest that homes and offices test the granite for this exposure.

Contractors providing granite products and installation need to be aware of these risks and take the necessary precautions in order to prevent these health hazards and be protected from environmental insurance claims. A pollution policy would help to reduce the potential for an out-of-pocket claim, and would work to further secure the future success and welfare of companies specializing in granite and their employees.

The ongoing issues with insureds’ contract requirements force insurance professionals to push the envelope each and every day. Trying to keep up with a client’s needs can take a great deal of effort, and with pollution coverage becoming a very real issue for most business owners and operators, it is important to understand the differences in coverage forms. One major point to focus on is the important differences between Sudden & Accidental and Broad Form Contractors Pollution Liability.

Over the past twenty years, the insurance industry has provided Sudden & Accidental Pollution coverage to a variety of business classes. This coverage was meant to satisfy certificate holders and property owners that were concerned with the potential for a pollution loss. Sudden & Accidental coverage is tied to a discovery and reporting period, and generally covers bodily injury and property damage caused by a pollution loss. The main issue with this fact is that if the loss happens over time or is not discovered or reported in the time allowed under the policy form, there is no coverage in place. Also, these forms tend to not have completed operations, action over, or clean up costs included.

Over the last decade, we have all seen companies that have started to provide broad form Contractors Pollution Liability coverage to many of these same industries. The Contractors Pollution Liability form covers bodily injury, property damage, and clean up expenses. Most of these forms also include completed operations and action over coverage, allowing for a much broader policy and giving real coverage to the insureds and their certificate holders. These policies can be written on both a claims-made or occurrence basis and the discovery and reporting period are tied to the policy term.

With the EPA continually growing and issues like the BP offshore incident, your insureds have a greater need to protect themselves from Pollution exposures and threats. Property owners, contract holders, and certificate requests are going to continue to ask for Pollution coverage and higher limits with broader terms. This is going to put more pressure on insurance agents to provide for these needs and to make sure the gaps in their clients’ insurance programs are covered. This can be done with a simple standalone Contractors Pollution Liability policy that can also include Products Pollution Liability, Transportation Pollution Liability, and some Site Specific coverage.

Always remember that when your insured is on a third party’s site they are exposed to environmental risks, they may not generate. We cannot anticipate who an insured will work for or what conditions they may be dealing with in their daily operations. Accidents can happen and with one simple insurance policy, you can remove the worry over the total or absolute pollution exclusion on the Commercial General Liability policy. We have to remember that thinking outside the box and providing expertise are the main reasons the insured pays his or her insurance agent. In order to protect both the client and the agent’s organization, it is crucial to be educated on environmental exposures and the forms that address them.

No matter which television channel or website you turn to, the Gulf oil spill has dominated the news. This is an environmental crisis that will affect the region’s economic capabilities and natural resources for years, if not decades, to come. Between 2 to 4 million barrels of oil have spilled into the gulf, compared to 257 thousand barrels during the Exxon Valdez event . The fishing and tourism industry, which was depressed before the tragedy, is now virtually non-existent. Gulf coast economies from Texas, Louisiana, Mississippi, Alabama, and Florida have all been affected, and scientists are predicting that the Gulf current may carry contaminants along the Florida Keys and up the east coast.

This disaster creates a tremendous opportunity for remediation contractors and consultants. Environmental contractors from across the country have flocked to the Gulf in search of clean-up contracts. Over twenty-four thousand people are working as part of the response to the April 20th accident and its aftermath. The spill has created a wide array of jobs from remediation/spill response contractors to ship boat captains to day laborers. Many unemployed fishermen, construction workers, and general laborers are receiving OSHA HAZOPER training and aiding in the clean up. “We have received numerous phone calls about potential start-up businesses or companies opening up new divisions in this area,” said Michael Tighe, Assistant Vice President at Beacon Hill Associates, a wholesale insurance broker and program administrator, specializing in the placement of environmental insurance.

Remediation Methods Used

More than 46,000 people – and nearly 7,000 boats – are now employed in the response1. While fishing business was struggling before the disaster, fishermen are now making $1,200 – $3,000 a day laying floating booms that contain oil once it rises to the surface . Where the oil collection is greatest they often create a “burning box”, which is a controlled burn over the water. In the marshes and other wetlands, contractors are mopping the oily sheen with absorbent oil pads, wiping each blade of grass, which can be time-consuming labor. In open water, boats are equipped with oil/water separators that skim surface water and can extract two thousand barrels of oil per day . Thousands of workers comb the beach using shovels or shifting machines collecting tarballs on the sand. Unfortunately, oil can be buried underneath the sand, between tides, which will require sand incineration or other deeper cleaning methods.

Potential Coverage Issues

Below are some coverage issues agents should consider when obtaining Pollution insurance for their clients.

Action over – not all liability policies provide action over coverage. An employee of the contractor may potentially sue the project owner directly for liabilities suffered during the work. This type of claim occurs more frequently with remediation contractors.

Time element triggers – some policies limit pollution to a sudden/accidental trigger only whereby the pollution occurrence and claim filing must occur within a limited period of time (usually 72 hours).  A policy that includes gradual pollution is more effective for emergency response contractors.

Coverage territory – The coverage territory within the policy may not include international waters.

Designated operations – Many Contractor Pollution policies provide coverage only for operations listed on the policy. If the contractor’s work expands beyond what is listed, no coverage may be afforded.

Watercraft exclusions – there are specific limitations under a package General Liability and Pollution policy pertaining to the use and length of boats allowed.

Subcontracted work and construction management exclusions – if the remediation contractor is using subcontractors, liability may extend only if the sub meets specific qualifications and insurance requirements. Also, the supervision of subcontractors may not be covered unless a Professional Liability policy is in force.

Transportation and disposal issues – if the contractor is responsible for the transportation and disposal of waste, there may be no coverage afforded under a basic Contractors Pollution policy, should an incident occur beyond the boundaries of a job site. Limited coverage is attainable in the marketplace with proper information.

Product exposures – specific Product Pollution policies are available for manufacturers and distributors of chemical dispersants, separators, containment booms, etc. used in the spill response. Coverage can be written stand alone or in conjunction with a commercial General Liability policy.

Pollution definitions – vary greatly. Some do not include “waste” in their definition of a pollutant. If waste/refuse is not included in the definition, it may lead to gaps in completed operation and disposal coverage.

Property – hurricane and wind concerns – In addition to contracting pollution exposures there has also been interest in environmental coverages from property owners.  In the midst of hurricane season, commercial property owners are becoming increasingly concerned that high winds may carry petro contaminants onto their premises. Interested parties are not only coastal, but miles away from shore. If the specified cause of loss is not the windstorm but rupture of the underwater well, many agents have found little or no pollution clean up coverage for real or personal property. The next wave of environmental contractors to the Gulf may be restoration contractors equipped to extract water and oil in and on buildings.

Due to the influx of submissions that environmental markets are receiving, they are starting to quantify the number insureds involved in the clean up effort. Additional supplemental applications may be needed to gauge the amount of on and off shore activities, as well as the amount of work subcontracted. Some carriers are limiting their exposure to coastal premises/site pollution policies, possibly offering coverage with higher retentions or without first party clean up triggers.

While agencies scramble to secure pollution coverage for their clients being affected by the oil spill in the Gulf, they should also get a clear picture of the prospective insured’s scope of operations, contractual responsibilities, and qualifications. This is crucial in order to offer effective insurance solutions, as no two policies are the same in the environmental insurance marketplace.

Contracting services can create environmental problems in the following ways:

Installation leads to hazardous indoor air quality.
One of the biggest environmental concerns faced by Mechanical/HVAC professionals is the allegation that their work has led to an unhealthy indoor environment. This can manifest itself in many ways, including odors, ill employees, or staining and damage to walls and fixtures. When these allegations lead to Bodily Injury, Property Damage, or Business Interruption, the claims can become sizeable. If the basis of the claims is the toxic nature of the contaminant, pollution exclusions are often cited.

Installation leads directly to mold growth.
Mold growth is generally caused where moisture, a food source, and an acceptably warm environment meet. One of the unfortunate drawbacks to installation problems with HVAC systems can often be excessive moisture, either in the form of condensation or actual leaks. This moisture, matched with wood or wall board and warmth, leads to mold. Most mold claims are excluded from CGL policies.

Job site pollution caused by the contractor disturbing existing conditions.
Many claims faced by Mechanical/HVAC contractors stem from disturbing asbestos, lead, or existing mold within the structure while work is being performed. This can take the form of asbestos wrap on piping, lead paint on windows and doors, or mold growth that existed prior to the work. Making these conditions worse by spreading the contamination can lead to significant liability on the part of the contractor.

Job site pollution caused by contaminants the contractor brings to the site.
Many Mechanical/HVAC contractors use equipment powered by generators, requiring fueling. They also regularly use solvents, acids, glues, and other toxic substances at the job. The release of these materials, or their improper disposal, can lead to pollution claims.

The operations of subcontractors for which the contractor is responsible.
When Mechanical/HVAC contractors hire subcontractors to do work such as electrical, plumbing, or remodeling and construction, they run the risk of being held responsible for pollution conditions stemming from the subcontractors’ work. Obviously the contractor will require the sub to carry his own insurance, and name the contractor as an additional Insured. If the subcontractor causes a pollution condition, and his environmental coverage is inadequate, the Mechanical/HVAC contractor may have to defend himself against claims relating to work for which they were responsible due to hiring of the sub.

HVAC firms have growing professional exposures:

Actual design work performed.
Many firms provide true design services as part of their corporate profiles. This can range from doing all of the design work for the project, doing some design work relative to an aspect of the HVAC system, or simply having a perceived responsibility to comment on design aspects they know to be poorly developed.  The last element is the most difficult to control and manage for HVAC firms.

Job site modifications made.
HVAC contractors are often presented with installations that do not work exactly as planned. In these situations, contractors will often tweak the specs while at the jobsite to make the system work. Malfunctions arising from these changes create a direct professional responsibility for the contractor.

Supervision of subcontractors.
Proper selection and supervision of subcontractors is a professional exposure most contractors share that is generally excluded from CGL and basic CPL policies. For contractors that may need to outsource certain parts of a job, the exposure can be significant.

It is important to remember that while addressing Contractors Pollution and Professional Liability are important, the key for this class of business is to address Mold at the same time. There are very few products that combine all three elements, so knowing how to get the appropriate coverage for your insureds and covering all bases is crucial to keeping them protected.

And, while some of these activities are regional, most companies operating in the energy industry span across the country. Here are some of the environmental coverages they often require:

General Liability/Contractors Pollution Liability
Combined General Liability and Contractors Pollution Liability policy that provides coverage for pollution claims arising from an insured’s covered and completed operations.

Products Pollution
Provides liability coverage for bodily injury and property damage to third parties arising out of a manufactured product. This would be especially important for blending/mixing facilities, companies that make solar panels, etc.

Transportation Pollution Liability
Coverage for insureds who need protection for pollution conditions caused by transportation. This coverage can also include loading/unloading should the insured’s cargo create a pollution condition. This would be important for haulers of any placard use, salt water disposal companies, etc.

Excess
Follow form Excess policies provide additional limits, following form over the underlying General Liability, Pollution, and any associated Professional, Employers, and Auto liability.

Although environmental liability insurance is not always required, the Gulf of Mexico oil spill is the perfect example of why it is crucial for energy companies to have adequate coverage. This is a great opportunity to contact your energy clients to make sure they have the right insurance program in place. For more information or to discuss a specific energy account, call us at 1-800-596-2156 or email us.

In today’s competitive insurance market, many carriers are emphasizing the highlights of their coverage form and adding enhancements to further broaden coverage.  For Contractors Pollution Liability (CPL), there are typically blanket endorsements that are now readily being included automatically. There are also a number of available coverage grants that can be added once the exposure is evaluated. To name a few:

• Blanket Additional Insured for Owners, Lessees or Contractors where required by written contract – including completed operations: broadly provides protection to the requiring Additional Insured for liabilities arising out of the ongoing and completed operations of the Named Insured.
• Blanket Waiver of Subrogation where required by written contract: the Carrier gives up or waives their right to subrogate, or attempt to collect or share in the responsibility of a loss for a requiring entity.
• Blanket Primary and Non-contributory where required by written contract: the Carrier is affirming that the Insured’s policy will pay first in the event of a claim (or be primary). Non-contributory means that not only will the Insured’s policy respond/pay first, but it will pay the claim (subject to limits) without the requiring entity having to contribute to the loss with their own insurance.
• Transportation Pollution Liability: applies to losses specifically caused by pollution conditions arising from transported cargo and the loading & unloading of that cargo when the vehicle is being used in the performance of Insured’s operations, first and third party carrier coverage available.
• Non-Owned Disposal Site Coverage: coverage for liability arising from the disposal of waste into a third party non-owned disposal facility that at the time of disposal is a licensed/permitted facility. Coverage is available on a scheduled locations basis or blanket basis.
• Restoration Costs: reasonable and necessary costs to restore/repair property damaged by a pollution condition resulting from the Insured’s operations to the condition of the property prior to the loss.
• Separate Defense Limits: The carrier will pay the costs incurred to defend the Insured for a claim; this will not erode the policy limits of liability, but be provided in addition to.
• Sudden / Accidental Site Pollution coverage for your Covered Locations: typically providing coverage for third party claims for pollution conditions migrating from the Insured’s location (locations scheduled, blanket coverage may be available).
• Incidental Professional Services Coverage: coverage for liability arising from opinions/recommendations made by the Insured about the covered operations that are incidental and necessary and for which no compensation is requested.

Your client is better protected with a CPL policy.  It is critical to compare coverage/carriers, in addition to price, when determining the best home for your pollution coverage.

General Liability/Site Pollution
Combined GL and Premises Pollution coverage, which provides coverage for both on-site and off-site clean-up, defense costs, and third party bodily injury and property damage claims.

Contractors Pollution Liability (CPL)
Provides coverage for pollution claims arising from an insured’s covered and completed operations.

Products Pollution
Provides liability coverage for bodily injury and property damage to third parties arising out of a manufactured product.

For more information on coverages for manufacturers and claim scenarios relating to them, email us to request this information.

The RRP Rule is a federal EPA program that affects contractors, property managers, and others who disturb qualifying interior and exterior painted surfaces. Remodeling, maintenance, painting/surface preparation, window replacement, electrical, plumbing, and carpentry activities are subject to the program rules. Exceptions include emergency repair work, minor repair work that disturbs less than 6 square feet of paint per room, and housing declared lead free by a certified lead inspector. Types of properties affected by the program include pre-1978 schools, daycare centers, residential homes, and apartment buildings.*

Currently painters, electricians, GCs, carpenters, property managers, and maintenance contractors are being required to provide pre-renovation educational lead pamphlets to tenants, receive delivery confirmation, and post signs about the workplace.

Effective April 22, 2010, renovators must attend an eight-hour training course by an EPA approved training provider and the firms they work for must also be accredited. Training classes address dust and debris containment, restricting open flame burning, exhaust control for power tools and clean up procedures, record keeping, and other precautionary measures. The accreditation must be renewed every five years. Other state and local requirements may also apply and be more stringent.

Insurance Issues
The EPA is broadening renovators’ responsibilities beyond the scope of a general contractor and General Liability policy. While contractors always have a Pollution exposure, the new EPA requirements increase the risk for Pollution liability claims. The new rule requires renovators to perform lead testing, encapsulation, and cleaning activities. It also requires the contractor to educate property owners/residents about the dangers of lead and the work to be performed.

A typical ISO GL policy usually excludes any meaningful Pollution coverage under exclusion “F” in the policy form. Most often a standard carrier will endorse an absolute pollution exclusion where they perceive heightened exposures. Stand alone Contractors Pollution Liability (CPL) policies are available for renovation contractors. The coverage provides third party bodily injury/property damage, defense, and remediation clean up coverage for their contracting operations.

Many excess and surplus lines insurance companies are offering on both a claims made and occurrence basis. Minimum policy limits usually start at $1 million with premiums in the $2,500 – $4,000 range. While the intent of the policy may be the same, coverage can vary tremendously between carriers. Be sure to receive a specimen policy when determining which coverage to purchase.

Renovation contractors should not only be aware of the current EPA regulations, but also how their changes in operations affect their current insurance programs. It is the agent’s responsibility to inform contractors of the added risk and need for additional insurance. For the most current information on the RRP Rule please visit the EPA website.

*Environmental Protection Agency webpage for the Lead-Based Paint Renovation, Repair and Painting Program. http://www.epa.gov/lead/pubs/renovation.htm

Trade Contractors are in a uniquely challenging position. While their responsibilities are often narrowly defined in the scope of services, they are usually one part of a multi-part process. This means that any claims that arise from a site may be brought against any or all of the contractors who performed operations at the location. And if the claim alleges something that is excluded by the contractor’s CGL policy, defense may not be provided.

Specific job site exposures that different types of trades have:

• Disturbing or exacerbating existing pollutants: Many contractors move earth, excavate, demolish, or otherwise alter existing features of a property. If any of those contain hazardous substances (petroleum contaminated soil, asbestos containing building materials, etc.), the contractor can be held responsible even though he was never advised that he would be.
• Contamination caused by materials the contractor brings to the site, such as paints, cleaning solvents, fuels, lubricants, etc.
• Contamination caused by operations, such as cutting through a gas line, installing flashing around window incorrectly, installing piping improperly, failing to solder joints, roofing leaks, erosion at site causing offsite contamination, etc.
• Contamination for which the contractor is held responsible, such as operations of a subcontractor to the trade contractor and actions of a party delivering materials to the site for the contractor.
• In addition to job site exposures, Trade Contractors also have exposures at the premises they own. This property, where they store their equipment and supplies, is often the single largest equity investment they have. Pollution at that location could reduce its value tremendously, effectively wiping out the equity built up by the owners.
• The final exposure area to note is Over the Road Pollution. This is the exposure that vehicles have going from owned premises to job sites. The upset and overturn of a vehicle can cause significant contamination, even if only from small amounts of fuels or solvents they use in their everyday work.

There are coverages available to address all of these exposures:

Contractors Pollution Liability
Designed to protect the Insured for claims stemming from pollution conditions at, on, or emanating from a job site arising where they are performing their operations.

Premises Pollution Liability
Coverage designed to protect against losses arising from the scheduled premises, which in this case would be the contractor’s owned properties.

Over the Road Pollution (Transportation Pollution Liability) is of course, coverage for pollution events during transit.

All of these coverages are available for most trade contractors, and they are all affordable. Many can be purchased together in packages, or separately depending on the needs of the particular Insured. For the trade contractor faced with many exposures that are effectively out of their control, consideration of this type of coverage is very important. In the current softening market, enhancing your clients’ coverage can be done for little additional premium and will help secure your relationship going into the future.