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Contractors working to build, repair, pave, and maintain roads are often faced with pollution exposure concerns, many of which may not be covered under a GL policy. Exposure consideration include:
Disturbing or exacerbating existing pollutants
When a contractor works at a site, they run the risk of uncovering existing pollution problems. This can happen in many ways, including digging into an unknown pocket of contaminated soil, disturbing an old storage tank, or simply cutting a poorly marked utility. While it would seem that the contractor should not be held responsible for this, under certain Federal and State laws, they can be. At the least, the contractor is often drawn into the situation, incurring significant expense in defending a pollution related loss that might otherwise not be covered.
Naturally occurring substances
Many substances that are considered pollutants occur naturally in the soil. Asbestos is a prime example. Contractors working in parts of the country where these substances are found need to be aware that disturbing these materials can lead to pollution claims, for which they would be responsible. Not all pollution policies provide coverage for this important exposure.
Job site pollution caused by the contractor
Many claims faced by street, road, and paving contractors stem from the materials at the site and the actual work being performed. Exposures of this type can take two forms: (1) Pollution conditions caused by materials the contractor brings to the site, such as fuel for heavy equipment, and (2) Pollution conditions caused by the operations themselves, including tack coat run off in sudden storms or erosion causing silting of streams and fish kills, etc.
The operations of subcontractors for which the contractor is responsible
Many times, street and road contractors will hire subcontractors to do installation of utilities, curbing or concrete work, etc. Obviously, the contractor will require them to carry their own insurance, and name the contractor as an additional inured. What often happens, however, is the sub will not carry adequate environmental coverage. If they cause a pollution condition, and their coverage is inadequate, the street and road contractor may be in a position of having to defend themselves against claims relating to work for which they were responsible due to their hiring of the sub.
Over the road pollution
All street and road contractors transport heavy equipment, tack coat, asphalt, and other materials over the road. An accident on the highway may lead to expensive clean up and third-party losses. Coverage available through the auto policy may be quite limited.
Contractor’s owned premises exposures
Most street and road contractors have significant property used to store and maintain their equipment. These facilities can range from simple field storage of machinery, to those facilities with maintenance bays, bulk fuel storage, body shops, etc. Any property where equipment is stored runs the risk of being contaminated from spills, rain runoff, and simple long-term exposure. For many contractors, this property represents a significant equity position. Losses from this type of exposure can include cost of cleanup, diminution of property value and third party bodily injury.
Contractors Professional Liability exposures
Contractors often have exposures for professional liability, either from operations they perform or those performed by entities working on their behalf. They may perform operations themselves that expose them to professional claims, including job site modifications, selection and supervision of subs, adhering to local codes and ordinances, etc. Contractors may also be brought into claims arising from subcontracted design, construction management, and project delivery methods. While some of these concerns may be addressed as “means and methods” under the GL form, and thus excluded in part from this Professional coverage, it is important for contractors to consider these exposures and understand where they are covered.
For more information on coverage for street, road, and paving contractors, contact us.