Overcoming Hurdles When Discussing CPL Insurance with Your Client

Having trouble responding to challenging questions relating to CPL insurance? We have put together some of the most common disputes pertaining to this coverage, and our suggestions for how to handle them.

My General Liability policy will cover everything.
This isn’t always the case. There are specific absolute or total pollution exclusions that limit how that policy would respond; many GL policies have pollution exclusions. CPL insurance could fill in any gaps your GL policy may have. Also, both types of coverage could be written into one policy for a reasonable price.

I don’t think I have a pollution exposure.
It may be a small exposure but what typically happens is a little exposure can lead to a large claim.
Something as simple as spilling fuel while on the job and you can be looking at a cleanup mandate or a lawsuit. Unfortunately, your General Liability won’t even come into play for defense costs so you’ll have to foot the bill.

I don’t deal with hazardous materials.
Insurance companies consider most liquids, gasses, smoke, and dust in large quantities as pollutants.
Accidental release of fuel and chemicals from broken pipelines, tanks, and utilities are only some of the
reasons many contractors decide to purchase coverage.

I’ve never had a claim before.
Environmental claims tend to be less frequent but large problems when they happen. On average, clean up costs tend to run in the hundreds of thousands. When you realize you may have an environmental problem it will be too late to purchase coverage!

I’m not required to carry it.
The requirements for environmental coverage are rapidly increasing. Chances are, you may bid on a contract that requires this coverage and you will already be ahead of the competition by having this policy in place. Also, having environmental insurance will be a great asset to your company’s image. Future clients will be impressed that you carry such extensive coverage. More and more contracts are requiring this type of policy, especially governmental work, and you know the bailout stimulus money is on the way!

But I sub out most of my work.
The pollution polices cover work performed by you or on your behalf, so if your subs cause a pollution condition to occur and they aren’t carrying the coverage themselves, it’s going to come back to you to handle. You’ll be covered for their exposure as well as your own.

It’s probably too expensive.
Premiums start around $2,500 – $5,000 for a million dollars of protection. Pricing is based on your projected revenue and any enhancements we may want to add to the standard policy, like mold coverage for example. Mold continues to be a hot topic from a legal standpoint…having coverage for defense costs alone may be worth buying a pollution policy.

The chances of something happening with my company are so slim. I don’t think it’s worth the money.
Coverage could also include work performed by your subcontractors, cost of defense in the event of a lawsuit, and 3rd party bodily injury and property damage. Also, jobs that are already completed could be covered. When you look at the low cost of a CPL policy, the price is small compared to the potentially costly problems you could face if you aren’t covered.