Account Profile: A Claim Involving Sudden & Accidental Coverage

By Patrick Manning, Associate Account Executive, Beacon Hill Associates, Inc.

Beacon Hill’s south central region recently had a discussion with an agent about a roustabout contractor who was working out in the field in the Permian Basin. Through the course of the conversation it was revealed that this roustabout contractor had recently been involved in a loss situation where his Sudden and Accidental Pollution coverage would not respond to the claim due to the time element trigger requirements on his current policy. The contractor had carried General Liability and Sudden and Accidental Pollution coverage for years without a problem until now. There was a leak in one of the lines that the contractor had performed work on, which occurred in early July 2015 (or at least that’s the closest timeframe the adjuster could conclude after a full inspection). But this leak wasn’t discovered and reported until November 2015. Once the discovery occurred, it was reported immediately to every contractor that had been on or around the site to try to determine fault and to make sure the claim would be covered under an insurance policy.

When the claim was brought to our agent’s contractor and submitted to their carrier, it was denied almost immediately because of the time element trigger. The insured’s Sudden and Accidental Pollution coverage allowed for a 7-day discovery period and a 30-day reporting period. Since the loss was discovered 4 months after it occurred, the form would not respond. Ultimately, the contractor ended up paying out of pocket for the defense and the loss itself, the cost of which was several times more than the cost of having the proper coverage. The agent’s one saving grace was that since he works primarily with energy field contractors, he is well versed in insurance coverages and their importance. He had developed a contract that he required his contractors to read and sign stating that they fully understood their decision to choose lesser coverage (i.e. Sudden and Accidental vs Gradual) and that he had offered the proper coverage.

After our discussion, we sent the agent an application and once we received a full submission including the supplemental, loss runs, Acord applications, and financials, we were able to secure a quote from an “A rated” carrier for only a few thousand dollars more than what the insured had previously been paying. In addition to improving the Contractors Pollution Liability to a gradual (occurrence) form, we also added Transportation Pollution Liability coverage as well as Premises Pollution coverage for the insured’s own premises/facility.

This is an example of a contractor hoping to only secure enough coverage to satisfy a contract (in this case a master service agreement) while not really being concerned with anything beyond the price of the policy. It can be difficult to explain to a contractor who has never experienced a loss the importance of having the proper coverage, which is why Beacon Hill Associates has developed tools and programs to assist our agents in this process. Contact us today to see what we can do to help explain the importance of Gradual Form Pollution coverage to your clients and to help secure the coverage they really need.