Why do I need pollution liability coverage?

As a general or specialty contractor, you may be exposed to high risks of contamination and claims that involve cleanup.

Most general contractors or construction contractors rely on commercial general liability (CGL) insurance to cover them from third-party claims due to injury or property damage. While CGL policies offer the best overall protection for contractors, there are some gaps and limitations you need to be aware of and one of those is contractors pollution liability (CPL). Standard CGL policies do offer some protection from pollution claims, but do not fully cover all cases of contamination and other environmental losses.

The main reason to consider pollution liability insurance is simply because of the limitations and exclusions that may exist in your current CGL policy. A common exclusion is called the absolute pollution exclusion and an even more restrictive one is the total pollution exclusion, which could leave you responsible for some very costly cleanups.

What are the most common pollution liability risks?

It can be as simple as breaking an oil pipe on a job site causing contamination to the surrounding environment. Your CGL policy would likely only cover the cost of repairing the pipe itself, and you’d be responsible for the cost of cleaning up the spill. Here are the main types of pollution liability claims:

Renovation work
Discovering asbestos can happen when renovating or demolishing older buildings. And if water has been leaking or seeping into a building, mold can be growing undetected until renovations reveal it. In either case, if your work disturbs asbestos or mold, both of which are related to serious health issues, you can be facing a very serious claim with little or no protection from your existing CGL policy.

Excavation work
Until excavation actually begins, you never really know what you might find. In spite of the best research and preparation, if you hit an old oil tank that nobody knew was there, you could be held responsible for cleaning up any resulting spill.

Other sources of pollution:

  • Defective drywall aka Chinese Drywall
  • Lead-based paint
  • Mold, fungus and other bacterial contamination
  • Runoff from construction sites
  • Asbestos
  • Exhaust/fumes
  • Solvents, fuels
  • Paints
  • Cleaning products
  • Pesticides and herbicides

In recent decades, all levels of government in Canada have introduced legislation to protect our natural environment. Companies that do not follow these laws can be assessed fines in excess of $100,000.

Who needs pollution liability

If you’re exposed to any of the risks above, contractor’s pollution liability is essential coverage. High-risk professions include:

Talk with one of our commercial insurance brokers for a thorough assessment of your business and review of your current coverage. Call us today at 1-800-731-2228 and we’ll be happy to help you with any commercial insurance questions or concerns.

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Frequently asked questions about pollution liability insurance:

Pollution liability insurance covers claims that arise from a leak or contamination that results from your contracting work. Some examples:

  • You’re excavating a site and accidentally hit an old oil tank
  • You’re tearing down an old wall during renovations and accidentally release asbestos or mold
  • Welding fumes make people sick and force the closure of an adjacent business

Pollution liability insurance pays for cleanup and/or remediation of the contamination, plus any costs related health effects, and legal fees.

No. Pollution or environment claims are usually excluded from commercial general liability coverage. If your contracting business works with toxic chemicals or does work that involves renovations or excavation, you need pollution liability coverage.

Pollution liability coverage is not usually sold on its own. It is sold as part of a contractors insurance package that also typically includes commercial general liability, tools coverage and commercial auto insurance.

Your business is unique, so are your insurance options.

Being a brokerage for over 70 of Canada’s top insurance companies means our commercial brokers have access to a wide range of coverage options as unique as your business – at some of the best rates in Ontario. We sweat the details so you can focus on your business. Want to learn more about the coverage options available to you? Here’s a few of them.